Skip to navigation

Understanding What Is Bad Faith Insurance

Jeff Martin Sept. 1, 2023

Insurance is a safety net, offering financial protection and peace of mind during unexpected events. Policyholders trust that their insurance companies will act ethically, promptly processing claims, and providing the coverage they've paid for.

Unfortunately, there are instances when insurance companies fail to uphold this trust, engaging in what is known as "bad faith insurance." In this article, we'll learn what is bad faith insurance and explore examples that can aid policyholders to recognize and address it.

Defining Bad Faith Insurance

Bad faith insurance refers to an insurance provider's unethical or wrongful actions in dealing with policyholders. It involves failing to fulfill the obligations and duties outlined in the insurance contract, often resulting in the unjust denial, delay, or underpayment of claims. These actions can leave policyholders in dire financial straits during a time when they should be receiving the support and protection they've been paying for.

Examples of Insurance Bad Faith

1. Unreasonable Denial of Claims: A pattern commonly seen in bad faith insurance cases involves an insurance company rejecting a claim without a legitimate justification. Policyholders deserve a clear explanation as to why their claim has been denied. When an insurance company fails to give a proper justification or withholds information, it is a sign of bad faith.

2. Inadequate Investigation: Insurance companies must conduct thorough investigations before making claim decisions. Bad faith happens when an insurer fails to properly investigate, leading to unjust denials or underpayments.

3. Undervaluing Claims: Another example of bad faith insurance is when an insurance company offers a settlement amount significantly less than the claim is worth, called "lowball." Insurance policies are meant to cover losses suffered by policyholders, and undervaluing a genuine claim is a tactic used by some insurers to minimize their financial liability.

Contact a Reliable Insurance Company!

Policyholders must understand bad faith insurance practices to safeguard their rights and ensure fair treatment from insurance companies. By recognizing the various forms of dishonesty that happen in the industry and taking the necessary steps to respond, policyholders are empowered to fight against unfair and unethical conduct.

If you believe you have been the victim of insurance bad faith in storm damage claims or any other situation, seek legal advice at the Law Offices of Jeff Martin. Our law firm in Tulsa, Oklahoma, specializes in insurance law and is well-versed in the tactics used by insurance companies to deny, undervalue, or delay claims.

We understand the frustration and financial hardships resulting from insurance bad faith, and we are here to level the playing field for policyholders. Contact us!