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Is Your Insurance Company Acting in Bad Faith? 5 Important Signs

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Combined, the five highest-earning American CEOs in the insurance industry earned over $100 million in 2020, according to The Wall Street Journal. With an average salary of $20,305,936.60 per year, that’s not a bad gig.  

Of course, the heads of organizations like Aetna and Cigna are compensated so highly because their companies make a ton of profit, which doesn’t happen by giving money away. Regular folks know that, and this is why trust for insurance companies isn’t even in the same ballpark as the value of those salaries and stock options. 

With so little trust in insurance companies to do the right thing, it’s understandable for people to wonder if their insurance company acts in bad faith—particularly when they feel like their claim is being unreasonably denied, slow-walked, or their settlement offer isn’t even close to the true value of what’s been lost. 

Unfortunately, bad faith can be notoriously tricky to prove. Recognizing the common signs of bad faith insurance practices is an important first step. The next is making sure you have an experienced insurance bad faith lawyer on your side who can help you hold your insurance company accountable. 

What Is Bad Faith From an Insurance Company? 

If you have health insurance through an employer, you obviously pay your share of premiums out of every paycheck. Your auto insurance is likely paid on a monthly basis. If you own a house or condo, homeowners’ insurance might be included as part of your mortgage payment.  

And in exchange for your hard-earned money, insurance companies are expected to provide the services outlined in your policies when you need them to. After all, these insurance policies are important contracts between you and the insurers. Provided that you meet your duty of the contract—paying the premiums—the insurance companies must pay all claims falling within the four corners of their policies. 

But while an insurance company is legally obligated to treat you with honesty and good faith by honoring the insurance contract, they don’t always live up to that obligation. When that happens, it’s said that the insurance company acts in bad faith. 

Louisiana Law and Insurers Acting in Bad Faith 

As you might imagine, Louisiana has legislation on the books that helps to protect consumers from bad faith acts committed by insurance companies. Specifically, Louisiana statute § 22:1973 outlines six factors which constitute times when an insurance company isn’t acting in good faith: 

  1. An insurance company misrepresents or manipulates the language in your policy for their benefit 
  2. Your insurance company does not pay a written, agreed-upon settlement offer within 30 days 
  3. The insurance company alters the policy, without your knowledge or consent, and denies your claim based on that alteration 
  4. An insurance company misleads you about deadlines for filing or having inspections conducted 
  5. Your insurance company fails to pay you within 60 days after you procure evidence of property damage 
  6. The insurance company doesn’t provide a valid reason for failing to settle your claim 

When you file a claim on your insurance policy, you could run into any of these potential issues. If so, it may be time to reach out to a legal team that has experience dealing with insurance companies who aren’t playing by the rules. 

What Are Signs Your Insurance Company Is Acting in Bad Faith? 

Let’s look at some specific signs of bad faith from insurance companies so you can recognize when it might be time to seek help from an experienced attorney and legal team.  

Ridiculously Low Settlement Offers 

When you consistently pay your premiums, you should be entitled to nothing less than a reasonable settlement offer. But your insurance company and its staff know you need the money from your claim and that you probably need it quickly. So, one of the most common bad faith acts is to start by offering an unfair settlement to you, one that is well below the value of your claim.  

You can find examples of situations where the initial offers from insurance companies are in the tens of thousands, but the final amounts compensated are in the millions of dollars. Clearly, those kinds of first offers are unreasonable. 

Remember, it’s not out of the ordinary for the company’s first settlement offer to be on the low side; this does not necessarily constitute insurance bad faith. Even if the first offer is significantly less than you expected, you can try to negotiate a better offer (although, that’s easier if you have experienced legal representation on your side).  

The fact of the matter, though, is that an absurdly low, obviously unjustifiable settlement offer is a sign that your insurance company could be acting in bad faith. 

Burdensome Document Requests 

It’s completely normal that you will be asked for many documents during the investigation of your claim. Compiling evidence and proving cases, either for or against a settlement, go hand in hand. You should gather the appropriate records and be prepared to submit them whenever you file your claim. 

However, if your insurance company starts asking for unrelated documents or makes repeated requests for documents they have already received, they are probably trying to make the claim process difficult for you. In other words, they’re acting in bad faith. 

Unreasonable demands like these can be intimidating and may compel you to hastily accept an unfair settlement offer. Be careful not to play into their hands. Instead, direct the insurance company to your legal representative and let them deal with us when they need documents.  

Delays in Investigation and Failure to Communicate 

Your insurance company isn’t dumb. They understand that timing is critical in an insurance claim. Professionals at insurance companies know you have bills to pay that are probably piling up until you receive an appropriate settlement. As that pile of bills gets higher, most people become more likely to accept a lower settlement offer than they are entitled to. 

Although a proper investigation certainly does take some time, stall tactics during the claims process are unacceptable. If you are facing delayed responses to your requests or are not receiving any communication from them, then your insurance company may very well be acting in bad faith. 

Unreasonable Denial of Your Insurance Claim 

The average person filing a claim with an insurance company—so, not someone who is intentionally trying to commit fraud—probably believes their claim is legitimate. The truth of the matter is that not all of them are valid claims. Even with the best intentions, some people submit claims that will rightfully be denied. 

Your insurer has every right to deny an improper claim. However, they also have an obligation to tell you why they are denying it. When they do, you may realize that their investigation was inadequate and, thus, you were given an unreasonable denial. This can demonstrate the insurance company acted in bad faith and you need to contact a bad faith insurance attorney to fight back.  

Failure to Pay Your Valid Claim 

Sometimes an insurance company will acknowledge that you have a valid claim and then, instead of taking the appropriate course of action, they pay slowly, don’t pay the full amount due, or avoid paying you altogether. We aren’t saying this happens a lot, but it is another case where you should consider contacting a licensed attorney to act on your behalf. 

Why Is Bad Faith So Hard to Prove? 

Understanding activities that constitute bad faith is a good first step toward knowing when an insurance company may have violated their end of your mutual contract. Proving when insurance companies fail to act ethically is another step, however, and it’s one that might be trickier than you’d expect. 

Even though bad faith insurance tactics seem rather cut and dried, the problem with deceptive practices like these is that they can be open to interpretation. 

Sure, when an insurance company denies your valid claim, you can gather proof and demonstrate what it shouldn’t have been denied. To prove that the necessary documents you needed to obtain were burdensome is a different matter. 

Generally speaking, there are three main cases you need to make to demonstrate that your insurer acted in bad faith in Louisiana: 

  • Your insurer received sufficient information—satisfactory proof of loss—to act on your claim 
  • Your insurer failed to pay your claim in the time allowed by the law 
  • Your insurer’s failure to pay lacked a reasonable basis and, instead, is deemed to be arbitrary or without probable cause 

LEARN MORE: Bad Faith Settlement Offers – What Should You Do 

When an Insurance Company Acts in Bad Faith, We’re Here for You 

A proven bad faith claim in Louisiana can potentially result in a recovery of the amount of the claim and the greater of: 

  • Two times the amount of the claim (or the difference between what was due and what was paid) 
  • $5000 

Along with that, there may possibly be punitive damages awarded as well. 

Generally, you have one year from the date of the loss to file your claim. This means it’s in your best interest to act soon. 

If you believe you’ve experienced a bad faith handling of your insurance claim, don’t try to fight it on your own. This can be a complicated matter and you will likely benefit from having a legal representative who has experience going against insurance companies. 

Contact a Bad Faith Insurance Claims Attorney Today 

The best path forward for holding your insurance company accountable is to hire a bad faith insurance attorney. This means the next step you should take is to find the right law firm to represent you. 

You will probably want a firm that has the right experience. Even better is one that’s interested in learning about you before taking your case, and that gives you the opportunity to learn about them. 

If you are considering Insurance Claim HQ to fight against the insurance company for you, you may want to take advantage of a free consultation with us. We can listen to your story, review your legal rights, and make sure you are treated fairly throughout the entire process. You will have the opportunity to ask us questions and see if we’re a good fit for you. And if you choose to hire us, you can trust that we have your back. 

Contact us for your free consultation today! 

 

References 

Francis, T. and Pacheco, I. (2021, June 1). From Tesla to GE, See How Much CEOs Made in 2020. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/from-tesla-to-ge-see-how-much-ceos-made-in-2020-11622539802?mod=management_lead_pos1  

La. Rev. Stat. § 22:1973. https://www.legis.la.gov/Legis/Law.aspx?d=509087  

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