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What is a bad faith insurance claim?

On Behalf of | Oct 23, 2022 | Firm News

When someone experiences a personal injury, insurance gives financial relief. The money an auto or property insurer provides helps pay for medical treatments. It also goes toward living expenses until the compromised individual may resume working.

Insurance companies, though, have an incentive to deny claims. Rejections put money back in their pockets. Sometimes, these corporate behemoths overreach with their reasoning for issuing denials. When this happens, the insurer is acting in bad faith.

What is an insurance rejection in bad faith?

Unscrupulous insurers may deny a claim after failing to conduct a thorough investigation. The final report may be missing key elements, including property damage.

Bad faith claims are not only those that fail to pay anything. Ones that grant significantly less than their true worth also qualify.

The deliberate misinterpretation of facts to limit payout further suggests wrongdoing. Other insurers may not explain the reasoning for the denial at all. Another hint includes taking an unreasonable amount of time to process a claim.

How does one know an insurance rejection is in bad faith?

Simply because an insurance claim receives a rejection does not mean misbehavior exists. Figuring out whether an insurer is making a reasonable argument necessitates policy analysis. The type of injury in question should receive explicit mention within the agreement. Identifying the relevant passage can be tricky. Insurance documents deliberately use convoluted language to enable denials.

Frustration abounds when a legitimate insurance claim receives an unjustifiable dismissal. The good news is that legal action may compel a coverage giant to reverse its ruling.