What Are Some Examples of Insurance Company Bad Faith Claims Practices?

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

While policyholders might reasonably anticipate that their insurance carrier will provide the financial protection the insured anticipated when purchasing the policy, the reality can be far different.  The financial power of the insurance industry is reflected by the fact that premiums in life and health (L/H) and property and casualty (P/C) account for $1.1 trillion dollars according to the U.S. Department of the Treasury Annual Report on the Insurance Industry.  When you pursue a first party insurance claim against your homeowner’s policy, the insurance company has a vested financial interest in denying or drastically underpaying your claim.  While there are some perils and types of loss that are clearly excluded or limited by a policy, insurance companies frequently act in bad faith in denying a claim that should be covered under a policy.

Many policyholders do not know what constitutes a bad faith insurance practice in the context of a claim for property loss under a homeowner’s policy.  Some examples of common forms of bad faith practices by insurance carriers:

  • Endeavoring to settle a claim based on a policy that was modified without notice to the policyholder and/or the policyholder’s consent
  • Unreasonable delay in acknowledging and replying to a claim
  • Imposing excessive requirements on an insured to produce documents not required under the terms of the policy
  • Employing demeaning or harassing practices in investigating a claim
  • Delaying, denying or discounting settlement of a claim without a proper basis
  • “Lowballing” claims payments
  • Alleging criminal activity on the part of the insured (arson, insurance fraud, theft or other crimes) without substantiation
  • Treating policyholders as adversaries
  • Policy cancellation for making a claim as retaliation
  • Failure to conduct a timely and thorough investigation of liability and damages
  • Electing not to pay a claim where coverage and damages are reasonably clear under one section of the policy as a negotiating advantage regarding settlement under another portion of the policy
  • Suggesting that an insured should not retain an insurance claims lawyer
  • Conducting a biased investigation
  • Conducting an outcome oriented investigation
  • Using persecution or victimizing tactics to intimidate policyholders into abandoning or accepting a lowball claim
  • Intentional misinterpretation of policy language
  • Searching for reasons to deny a claim rather than a basis to pay a claim
  • Intentionally misconstruing or misinterpreting the law to the disadvantage of the policyholder
  • Shifting the responsibility or obligation for conducting an investigation to the insured
  • Disregarding the insurance companies own procedures enumerated by its claim’s manual
  • Failing to timely tender the policy limits

While this may seem like a long list of bad faith tactics, this is really a meager sampling of the types of bad faith practices routinely employed by insurance companies to frustrate policyholders and deny claims. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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