Unfortunately, home fires remain a serious risk. According to data from the National Fire Protection Association (NFPA), more than 350,000 residential properties in the United States sustain significant fire damage each year. Following a fire, you have the right to file a claim through your insurance policy. A fire damage claim should be paid in full in a timely manner.
Unfortunately, that does not always happen. Bad faith insurance practices are a serious issue in the industry, including for fire damage claims. At Insurance Claim HQ, we want you to have the knowledge to protect your best interests. In this article, our New Orleans bad faith insurance lawyers provide a guide for spotting bad faith insurance practices in fire damage claims.
Bad Faith Insurance Claim: Know the Basics
The American Bar Association (ABA) defines bad faith insurance as a type of claim that arises when an insurer fails to act fairly and reasonably towards a policyholder. Simply put, it is when the insurance company does not fulfill its obligations under the policy agreement—either by denying a legitimate claim without a valid reason, by unnecessarily delaying claim processing, or by refusing to pay the full value of a covered claim. Policyholders who believe their insurer is acting in bad faith have a right to take legal action. They may be entitled to recover additional bad faith damages.
What is Bad Faith Insurance (Examples)
Bad faith insurance practices can take a wide range of different forms. It is crucial that homeowners and business owners are prepared to address unfair conduct by the insurance company in a proactive manner. Here are some examples of bad faith in the context of a fire damage claim:
- A Wholly Unreasonable Denial of the Claim: Insurance companies are required to provide a valid reason for denying a claim. A bad faith practice occurs when an insurer denies a claim without a legitimate reason. For example, imagine a home in New Orleans is extensively damaged by fire. If the insurance company denies the claim based on an unfounded allegation of arson by the homeowner without conducting an investigation, that could be deemed a bad faith settlement practice.
- An Excessive Delay in Processing the Claim: Property insurance companies cannot use delay as a settlement tactic. Indeed, by deliberately delaying the processing of claims to pressure the policyholder into accepting a lower settlement, they may be liable for bad faith. In the context of fire damage, an insurer might continuously delay the processing of a homeowner’s claim, causing them hardship as they cannot begin repairs or rebuilding. That prolongs their displacement and increases their living expenses. It is bad faith.
- Refusal to Pay the Full Claim Amount (Lowball Settlement): Another potential example of bad faith is an unjustifiable, extreme lowball settlement offer. It occurs when an insurer acknowledges the claim but refuses to pay the full amount necessary to cover the damages according to the terms of the policy. For example, a homeowner whose house has been damaged by fire might submit a claim that accurately reflects the cost of necessary repairs, only for the insurer to offer compensation that is just a small fraction of their damages.
- Lack of Clear Communication: Finally, insurers may also engage in bad faith when they fail to communicate clearly and promptly with the claimant. They should not leave policyholders in the dark about what needs to be done to move the claim forward, the status of their claim, or the reasons for delays and denials. A homeowner dealing with fire damage might find themselves unable to get straight answers or updates from their insurer about the progress of their claim. That could be bad faith by the insurance company.
How to Spot a Bad Faith Insurance Practice in a Fire Damage Claim
Property insurance claims are notoriously complex. It can be quite difficult to know whether or not your insurance company is engaging in bad faith settlement practices. You may have an inkling that bad faith is occurring—but you may not be sure. Here are five tips to spot bad faith insurance practices for a fire damage claim:
- Consider their Communication (or Lack Thereof): An insurer that fails to communicate clearly or frequently enough about your claim might be engaging in bad faith. If you find it difficult to get updates or direct answers regarding your fire damage claim, that is a sign that you may be being treated unfairly.
- Watch for Sudden Policy Reclassifications: Homeowners should also be wary of an insurer that suddenly reinterprets (or seemingly changes) the terms of a policy after they file a claim. For instance, if, after filing for fire damage, the company claims certain damages are not covered when your original policy did not exclude them, that could be bad faith.
- Follow Up On Any Unexplained Delays: If your insurer repeatedly delays processing your fire damage claim without providing clear reasons, that may be a bad faith practice. Insurers are obligated to process claims in a timely manner. Unjustified delays can exacerbate your losses, and it could be a sign that your insurer is acting in bad faith.
- Be Skeptical of Requests for Unnecessary Documentation: Insurance companies have a right to get relevant information. However, if an insurer asks for excessive documentation that is not relevant to your claim or repeatedly asks for the same documents you have already provided, it could be a tactic to delay or deny your claim unjustifiably.
- Do Not Accept a Lowball Settlement Offer: Watch out for offers that seem unreasonably low compared to the estimates provided by contractors or loss assessors. If your insurer offers to settle a fire damage claim for less than what professional estimates suggest is needed to repair your home properly, that could be a sign of bad faith.
You do not have to take on the claims process alone. If you believe that you may be being treated unfairly by the insurance company, the best thing that you can do is to set up a free, confidential consultation with an experienced bad faith attorney. Your lawyer can answer questions, review your case, investigate the matter, and help you understand if your insurer is acting in bad faith.
Why Trust Insurance Claim HQ for Help With a Bad Faith Fire Damage Claim
Dealing with the aftermath of a fire in your home or business is traumatic. It is normal to feel extremely stressed out, frustrated, and overwhelmed by the gravity of the situation. Things are made all the more difficult if you are stuck dealing with an insurance company that is acting in bad faith. At Insurance Claim HQ, we are experienced in bad faith insurance claims—including bad faith fire damage denials. With a strong record of case results, it is our mission to help policyholders get access to the full and fair benefits that they are owed. We will help you pursue the maximum available bad faith compensation if you were treated unfairly by the insurance company.
Schedule a Free, Confidential Consultation With a Top New Orleans Bad Faith Lawyer
At Insurance Claim HQ, our New Orleans bad faith insurance lawyers are committed to holding large insurance companies accountable for their failure to live up to their obligations. If you believe that your fire damage claim was denied in bad faith, we are here to help.
Reach out to us now by phone or connect with us online for a free, no-strings-attached case review. We handle bad faith fire damage insurance denials in New Orleans and throughout the Gulf Coast region.
