Insurance companies make the most money when people don’t file claims. The money received in premiums can fall far short of the total coverage provided by an insurance company.
The more claims policyholders make, the more the profit margins for the insurance company shrink. The law requires that insurance providers uphold their policies in good faith to prevent scenarios in which profit incentives prevent people from obtaining the coverage they deserve.
Bad faith insurance practices can take many forms, including creating unreasonable delays during the processing of valid claims.
Policyholders deserve prompt payouts
When people file claims to cover the expenses of a third party injured on private property or repair structural damage caused by a storm, they face immediate expenses that necessitate insurance. Insurance providers sometimes deny valid claims and offer inappropriate settlement amounts.
They may also try to deter people from completing a claim, which may entail procrastinating and dragging the process out as long as possible. As such, state statutes mandate that insurance providers typically only have 30 days from the date that a policyholder submits official documentation of their claim to complete the investigation process. Insurance providers can take more time if they provide written notice to policyholders in some cases.
For most claims, however, adhering to the statutory timeline for claims processing is critical for preventing allegations of bad faith insurance practices. When insurance professionals have delayed communication, dragged out the investigation process or otherwise created a frustrating situation with the intent of deterring a claimant, their conduct may violate the law and constitute bad faith insurance practices.
Filing a lawsuit can lead to not just paid claims but also additional compensation. Those who believe that they’ve experience bad faith insurance practices may need to review their policy paperwork and claims information with an experienced attorney accordingly.
