24 Red Flags that Indicate a Bad Faith Claim

Good faith insurers look for and find ways to accept and pay claims properly and promptly, whereas bad faith insurers unlawfully look for and find ways to not pay, delay, diminish, disapprove, shift blame, and deny payment of claims. You need to know what the red flags are that indicate a bad faith insurer. Once you know these red flags, you can take action in ways to protect your rights and force them to pay per the policy you have paid for.

  1. An insurer may be acting in bad faith if the insurer delays, discounts or denies payment without a reasonable basis for its delay, discounting or denial.
  2. Failure of insurer to acknowledge and reply promptly upon notification of a covered claim.
  3. Failure of Insurer to pay a covered claim as a result of failing to do a proper, prompt and thorough investigation as to reasonable liability and damages based upon all available information.
  4. Failure of insurer to affirm or deny coverage of claims within a reasonable time upon receipt of the claim and/or proofs of loss.
  5. Failure to offer or attempt to effectuate prompt, fair and reasonable evaluation of damages and equitable settlements of claims to insured within a reasonable time where coverage is deemed to be clear.
  6. Insurer attempts to settle a claim for less than the amount to which a reasonable person would have believed was entitled or attempts to substantially diminish a claim requiring an insured to initiate litigation.
  7. Making payment(s) for claims without accompanying statement indicating the coverage for which payment(s) are being made
  8. Failure of insurer to promptly provide reasonable explanation and basis when denying or making a compromise offer of claim settlement.
  9. Requesting over burdensome documentation demands not required by the policy.
  10. Using illegal and fraudulent investigative methods and procedures.
  11. Using harassing, intrusive or demeaning investigative methods and procedures which victimize the insured.
  12. Failure of an insurer to settle a claim directly, when and where settlement is required, and instead requiring the insured to pursue a claim against another party first before offering a settlement.
  13. The Insurer will negotiate with the service provider about the insured bill, but the insurer will not fulfill on said negotiations and come back to renegotiate more items, yet still not payout on the claim.  It is just a stall tactic.
  14. The insurer will advise the insured to go silent on the service provider asking for payment from the insured in order to stall and delay payout on a claim.  The result can often be that insured will accrue interest on the outstanding bill and late fees, that the insured is contractually responsible for.  The insurer will not willingly reimburse these additional costs to the insured in most cases.
  15. Unjustified contention and/or “lowballing” regarding the value of a loss.
  16. Intentionally withhold, misinterpret or misconstrue claims information and/or failure to not inform insured of provisions and covered benefits under the policy pertinent to a claim.
  17. Attempts to use indiscriminate measures, reference and/or procedures that diminish or reduce the top line amount or value representing full payment of the claim.
  18. Intentional or irresponsible non-disclosure and withholding of information, misinterpretation of file documents and/or policy provisions, that would be in favor of the claimant.
  19. Unsubstantiated and unwarranted accusations of arson.
  20. Offering legal advice to insured in regard to their claim.
  21. Wrongful threats not to pay claims.
  22. Utilization and/or development of deceptive insurer schemes or use of outside company services set up or conducted to carry out the same false pretense schemes (i.e. “Third Party Adjusters”) for the purpose to be able to wrongfully deny or reduce payment of claims.
  23. Using inaccurate or wrongful information of a factual or legal nature to diminish, deny or delay payment of a claim.
  24. Unreasonable misinterpretation of policy language.
Bad Faith Insurance Claims
Bad Faith Insurance Claims

Chris

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