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Five Ways Insurers Act in Bad Faith

Fri May 28th, 2021 on     Bad Faith Insurance,    

Speak With a Miami Insurance Claim Lawyer Today

We understand that it can be endlessly frustrating to find yourself in a situation where you have a legitimate insurance claim, but cannot get paid out for the damages.  When insurers act in bad faith, they are exposing you to financial vulnerability in the hopes that they can simply improve their “bottom line.”  It’s your right to challenge the insurer and get the damages payout that you deserve.

Ver Ploeg & Marino, P.A. is a Miami-based insurance litigation firm, committed to providing client-oriented legal representation.  We pride ourselves on our ability to secure favorable outcomes for our clients at every phase of a dispute.

Over the years, our team has developed a reputation in the industry as thorough advocates who will stop at nothing to achieve our client’s objectives.  We have a “trial-ready” approach, and although we aim to secure a result through settlement, where the insurer is hostile, we are ready and willing to take a case to trial.

If you’d like to speak to a seasoned Miami insurance claim lawyer about your dispute, we encourage you to contact us to schedule a consultation at your earliest convenience.

Fortunately for Florida policyholders, when insurers act in bad faith, courts are empowered to not only award you compensatory damages but may also award punitive damages, which can multiply your recovery amount and lead to enormous wins.

Exciting, right?

Let’s take a closer look at five ways in which insurers act in bad faith.

Failure to Investigate

Insurers are obligated to fully investigate their policyholders’ claims.  If your insurer has failed to conduct a full investigation, or if they have put only a minimal effort (leading to inadequate reporting, or misreporting of the facts), then it puts you in a vulnerable position — under those circumstances, the insurer is not operating with accurate facts, and as such, is burdening you with their heavy-handed administrative process despite not having properly investigated the claim.

Insurers must leverage adequate resources when investigating a claim.  If your claim requires expert assistance, then they must hire a relevant expert to investigate (or to co-investigate with the adjuster).

For example, if you lost your house in an electrical fire, then the insurance company may need to send a fire expert to help investigate and report back as to their special findings.  If they do not do so, then they could be operating on assumptions made based on a general investigator’s findings — which are unlikely to be as accurate compared to a fire expert.  In some circumstances, a court may consider this a failure to fully investigate, to the point that they would consider it bad faith misconduct.

Failure to Payout a Legitimate Claim

Insurers in Florida must pay out for covered, valid insurance claims.  They are not entitled to reject a reasonable claim that has a legitimate basis.  Failure to pay a legitimate claim could lead to a bad faith action.

Insurers will often skirt this requirement by pointing to ambiguous coverage language allowing them to impose an exclusion, for example, but these attempts often lack “teeth.”  This is especially true in Florida, where ambiguous language is interpreted in favor of the policyholder, not the insurer.  As such, you have a natural strategic advantage when negotiating with the insurer in this regard — it’s important that you use it to push for a fair settlement.

Unreasonable Delay in Processing Claims

Insurance companies often delay the processing of a policyholder’s claims because it works to their advantage in a number of ways:

  • The insurer can “exhaust” the mental resources of the policyholder to the point that the policyholder either forgets to continue pursuing their claim or accepts an undervalued settlement offer;
  • The insurer can retain the funds that would have been paid out for longer, thus gaining the benefit of whatever interest that they are earning on the funds (which are invested into various financial vehicles); and
  • The insurer may choose to retaliate against the policyholder for challenging the insurer’s decisions, and this may be a strategic decision to undermine other similarly-positioned policyholders.

Unreasonable delays may give rise to an actionable bad faith lawsuit under Florida law, however, so if you believe that the insurer may have unreasonably delayed your claim, then we encourage you to contact an experienced Miami insurance claim lawyer at Ver Ploeg & Marino, P.A. for further guidance.

Unreasonable Documentary Requirements

Insurers do not have a right to set up policyholders to fail.  How does this play out in real-world terms?

Suppose that you have purchased business interruption insurance coverage.  When you are ready to make a claim for damages, however, the insurer rejects your claim on the basis that they have not received all necessary documentation.  They point to their need for detailed personal health records, detailed personal home records, and many other records completely unrelated to your business.

Though it’s not a guarantee of bad faith, insurers who impose excessive requirements — such as detailed documentation unrelated to the claim at hand — may be engaging in bad faith misconduct.

Unreasonably Undercutting a Claim

Insurers are required by law to act reasonably when faced with making a settlement offer to the policyholder.  They are not entitled to excessively undercut what would be considered a “fair” settlement.

Fairness will depend on the facts of the case, of course.  If you have strong evidentiary support that you suffered $100,000 in home losses, then your home insurer cannot undercut that excessively and offer you $10,000 in their settlement.  That would be considered an arbitrary or even malicious offer and could lead to a bad faith action.

It’s worth pointing out that you’ll want to investigate your claim extensively to ensure that you have all the facts to support the amount of your damages.  Without factual support, it can be a challenge to show that the insurer is excessively undervaluing your claim.

Get the Help You Need From a Miami Insurance Claim Lawyer

Our team is here to help you if you believe your insurer has acted in bad faith when handling your claim. Contact us today to discuss your specific situation.

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