When people pay for insurance coverage, they expect companies to uphold their policies. That is the nature of insurance coverage. People purchase policies to protect themselves from unanticipated losses and liability. They file claims when scenarios lead to injury, property damage or other covered losses.
Federal and state laws mandate that insurance companies should uphold their policies in good faith. The failure to uphold an insurance policy could constitute a bad faith insurance practices, which could result in litigation.
Some companies operate in bad faith by denying valid claims. Others offer inappropriately low settlements. Interminable processing delays can be another way for insurance companies to violate the rights of policyholders. To avoid inappropriate company conduct, the law imposes a turnaround time for claims.
Companies must respond to claims quickly
Typically, the insurance company has 10 working days to acknowledge a claim and provide any specific forms required for the claim. The turnaround time increases to 15 days in cases involving group insurance.
Once the claimant submits the necessary paperwork, the insurance company then has time to investigate and decide what compensation to offer. Usually, the company should make a decision within 40 days of the claimant providing all necessary documentation. In scenarios where policyholders have followed the right procedures but do not receive responses, they may need to take additional action.
Holding a company accountable for bad faith insurance practices can result in a paid claim and consequences for the company. Reviewing the claims process thus far with a skilled legal team can help people determine if an insurance company may have violated the law and their rights as policyholders.
