Homeowners insurance can protect property owners from a number of challenging situations. If their dog jumps their fence and bites a delivery professional, their liability coverage can protect them from costly injury lawsuits.
If a storm damages the roof or peels the siding off of the home, the insurance policy can help pay for repairs and may even cover the cost of alternative living arrangements until the property is once again safe to inhabit. Insurance can also help cover losses related to fires and criminal activity.
Property owners filing insurance claims usually expect a simple process with minimal challenges. Unfortunately, insurance professionals are often eager to minimize payouts even when policyholders clearly have a valid claim. Any of the three warning signs below are potentially indicative of bad faith insurance practices and the potential need to work with a professional while negotiating the claim.
1. Denying reasonable claims
Sometimes, an insurance provider’s bad faith is immediately obvious. Instead of working with the policyholder to negotiate an appropriate settlement, a professional outright denies a claim that clearly falls under the scope of the policy. In cases where insurance professionals try to convince policyholders that a covered loss is not eligible for a claim, that may be reason to secure legal support.
2. Offering lowball settlements
The insurance company doesn’t necessarily need to cover all of the losses associated with a covered incident. Policy limits dictate the maximum amount of financial protection provided. Not every claim is large enough to reach policy limits, but settlements that are well below the policy limits can be a warning sign of questionable insurance practices. It is often necessary to negotiate after a first settlement to secure a reasonable payout.
3. Delaying responses
State statutes require prompt communication with policyholders. Insurance companies have to acknowledge initial communication and provide approval loss documents. They could communicate promptly when investigating the claim. Finally, after settling or approving the claim, they have to make the payment in a timely fashion. Failing to conform to appropriate turnaround times for large claims can constitute bad faith practices that may warrant a lawsuit brought against the insurance company.
Discussing the frustrating conduct of an insurance company with a skilled legal team can help policyholders as they negotiate large insurance claims. Policyholders generally have the right to legal representation when dealing with insurance providers, especially when there are warning signs of bad faith practices at issue.