The following are some examples and indicators of bad faith insurance claims settlement practices and a few of the signs that may be indicative to make you aware that you are, or maybe dealing with a bad faith insurer. Note: the content in this eBook was contributed by
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 liability is reasonably 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. Attempting to settle claims on the basis of an application and/or policy which was altered without notice, knowledge, or consent of the Insured.
8. Making payment(s) for claims without accompanying statement indicating the coverage for which payment(s) are being made.
9. Insurer failure to make known any arbitration award appeals policy in an attempt to settle a claim for less than the arbitration amount awarded.
10. Insurer requiring claimant or physician to submit both a preliminary claim report and formal proof of loss forms which contain substantially the same information.
11. Failure of insurer to promptly settle claims, where liability and coverage is reasonably clear under one portion of the insurance policy in order to influence settlements of coverage for
another portion(s) of the policy.
12. Failure of insurer to promptly provide a reasonable explanation and basis when denying or making a compromise offer of claim settlement.
13. Failure of the insurer, when making a cash payout to settle a first-party auto insured claim, to pay the same amount which the insurer would pay if repairs were made.
14. Requesting over burdensome documentation demands not required by the policy.
15. Reference or focusing on recovering on the uninsured portion
of the loss.
16. Using illegal and fraudulent investigative methods and
Procedures.
17. Using harassing, intrusive, or demeaning investigative methods and procedures which victimize the insured.
18. 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.
19. Failure of Insurer to make full and satisfactory payment of a first-party claim prior to requiring settlement or exhausting the limits of a third-party insurer.
20. Failure of Insurer to unreasonably refuse to waive subrogation thus hindering or preventing a claimant from reaching a settlement with the party at fault.
21. Unjustified contention and/or “lowballing” regarding the value of a loss.
22. 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.
23. Attempts to use indiscriminate measures, references, and/or procedures that diminish or reduce the top line amount or value representing full payment of the claim.
24. 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.
25. Wrongful threats not to pay claims
26. 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 for the purpose to be able to wrongfully deny or reduce payment of claims.
27. Insurer advise claimant not to hire a lawyer.
28. Treatment of insureds represented by attorneys as insurer adversaries.
29. Treatment of insureds and claimants as adversaries.
30. Significant increase in the amount of premium as a result of making a claim where the insured was not at fault and in conflict with industry standards.
31. Cancellation of a policy as a result of making a claim or result of an accident where the insured was not at fault and in conflict with industry standards.
32. Failure to live up to, conform, or comply with industry standards.
33. Using inaccurate or wrongful information of a factual or legal nature to diminish, deny, or delay payment of a claim.
34. Not being forthcoming with facts regarding coverage to deny, delay, or reduce the amount of the claim.
35. Using extreme undue persecution, wrongful and victimizing tactics and actions, meant to crush, threaten, thwart, intimidate, oppress, in order to scare away and get the claimant not to make or pursue a claim.
36. Failure to convey to insureds settlement offers and demands of adversaries in accident and liability cases.
37. Changing or altering policy coverage without informing or receiving the consent of the insured.
38. Representation by an insurer that an investigation “of fact” is taking place, knowing that no investigation is being done, in order to intentionally stop and dismiss an inquiry by a plaintiff, plaintiff’s attorney, or DOI examiner.
39. Biased investigation of that which is supposed to be neutral and unbiased.
40. Repeated and constant reference and intentional miscommunication and misrepresentation by insurer downplaying the size of a claim to the insured’s attorney.
41. The same claims person of an insurer handling conflicting and both sides of the same or related claims.
42. Deviating from standard procedures called for in an insurer’s claims manuals.
43. Attempting to prevent the court or an insured’s attorney with due exception from securing a copy of an insurer’s claims manual.
44. Abusing and/or misusing the judicial court system in order to delay or settle in good faith payment of a claim where liability to the claim is clear and amount of the claim is reasonable in order to delay insurer’s having to make payment of a claim.
45. Fraudulently misrepresenting and revealing various conflicting financial information that mischaracterizes the true financial information and status of an insurer.
46. Attempting to shift blame and responsibility of investigation to insured and away from the insurer.
47. Insurer refusal to settle a third-party claim against an insured within the limits of the insured’s policy thereby exposing the insured to additional liability.
48. Intentionally misinterpreting or misconstruing the law to the disadvantage of the insured and benefit of the insurer.
49. Deny treatment for a covered health benefit because of its expensive cost and instead misrepresenting and suggesting a less costly procedure in its place to be just as effective when it is not.
50. Unreasonable denial of a covered health benefit because of its high cost.
51. Unreasonable misinterpretation of policy language.
52. Taking undue excessive advantage of the unlimited time when knowing there may be no time limitations established on alleged investigations of such matters or matters of fact.
53. Making health insured patients pay their standard copay when the cost of both the drug and the pharmacy’s fee for dispensing the managed care prescription is lower than the copay amount.