All businesses aim to reduce overhead costs in order to boost profits. And, insurance companies are no different. Unfortunately, many insurance carriers act in bad faith, take drastic measures, and skirt the law in order to avoid paying rightful claims owed to policyholders. And this could be a big reason why the insurance industry is a top money maker.
According to a study conducted by the American Association of Justice, the U.S. insurance industry collects over a trillion dollars in premiums every single year. Travelers insurance, for instance, just reported almost a billion dollars in net income-for just this previous quarter.
So it’s important for policyholders who have filed an insurance claim, or are waiting on a decision about a claim to remain wary of several bad faith tactics many insurance carriers often utilize to avoid paying claims:
Common bad faith tactics
- Unreasonable delays: In some cases, insurance companies will take an unreasonable amount of time initiating or investigating a claim before agreeing to pay out. This tactic is done in the hopes that the claimant will simply give up contacting the carrier and attempting to pursue the claim.
- Outrageous demands: In other cases, insurance carriers often make excessive demands upon claimants. Some force policyholders to fill out burdensome paperwork or obtain information from countless parties before agreeing to investigate their claim or pay out benefits. Such tedious requirements are often difficult for a policyholder to fulfill and many unfortunately give up the pursuit because they feel it’s not worth the time and energy.
- Deceptive practices: In other instances, insurance companies allegedly utilize outright illegal methods to avoid paying out claims. Deliberately interpreting policy language against the claimant, or failing to disclose rightful coverage in order to thwart the payment of rightful benefits are a couple of examples that have been used by carriers in the past.
Seeking advocacy
All policyholders should understand that insurance adjusters who make decisions about claims do so in the interest of insurance companies, not policyholders. So, it’s vital for those filing a claim to have an advocate on their side.
Seeking the help of an experienced lawyer knowledgeable in insurance law is essential. A lawyer knows the procedures as well as the bad faith tactics insurance companies cannot use against claimants. A lawyer can also help claimants navigate the process and procedural requirements to help mitigate the time it takes to pursue a claim and receive rightful compensation.
