How to spot bad faith insurance tactics in Virginia
March 8, 2021 by GKwriter
An insurance policy is essentially a contract between the purchaser and the issuer. The purchaser agrees to pay premiums on a set schedule and on time. In return, the insurance company agrees to pay out on claims when the purchaser (also known as the insured) makes a claim.
But when the insurance company fails to uphold its side of the deal, it’s known as insurance bad faith. These companies look to limit their liability and maximize their profits. The only way to do that is by denying claims or paying out the minimum on a claim.
The problem with this is, it’s not always on par with the policy language. When this happens, it means that the insurance company did not uphold its end of the deal with the purchaser.
The best way to defend yourself in insurance bad faith cases is to hire a lawyer. Your lawyer will work with you to review your insurance policy language, the circumstances of your claim and any information the insurance company has sent you since you filed the claim.
From there, your lawyer will build your case and file it in the appropriate Virginia court. But before any of that happens, you’ll need to be able to identify bad faith insurance tactics. By knowing this information, you’ll protect yourself from becoming a victim.
Here’s a look at some dishonest and illegal ways insurance companies try to avoid paying claims.
Misinterpreting policy language to avoid paying a claim
One of the slyest tactics that insurance companies use to deny paying a claim is misinterpreting policy language. The problem with this tactic is that the insurance company has a team of lawyers telling you that certain clauses mean certain coverages.
But you as an individual don’t have that team of lawyers to also review the policy language to make sure they are interpreting it correctly. The insurance company’s legal team uses complicated legal language to encourage the insured to back off.
When this happens to you, be sure to get a second opinion. If you’re working with a third party’s insurance, you might have your own agent review the policy language for you.
An example of when this might happen is in the case of a car accident where you’re not at fault. In this case, you’d be going through the other driver’s insurance company to pay your bills. You could ask your insurance company to review the policy language and information you’re getting. This initial review can help you know what your best next steps are in pursuing payment.
Failing to investigate and pay a claim promptly
To discourage claimants, some insurance companies drag their feet when it comes to investigating and paying a claim. This is a violation of your agreement with the insurance company, which promises to be there when bad things happen.
But by delaying your claim, the insurance company can deter you from pursuing the claim.
Another tactic they might use is delaying payment of a claim. Once the insurance company has completed the investigation and determined the validity of your claim, it should payout on that claim.
Some companies delay these payments for their own benefit. It might be to push it into another month for cashflow purposes or even into another year to meet their financial goals.
Not disclosing policy limitations and exclusions
Undisclosed policy limitations and exclusions can also be an insurance bad faith tactic. In these situations, the company sells you a policy without telling you about large exclusions.
You should know what’s excluded from your policy before purchasing. This will help you weigh the benefits of such a policy before paying out premiums.
But when the insurance company fails to tell you this pertinent information about your policy, they’re being dishonest. All exclusions should be clearly listed in your policy language. An insurance company cannot claim an exclusion that is not explicitly listed in the policy language.
If they do try to create exclusions after you’ve purchased the insurance policy, this is an insurance bad faith tactic and you need a lawyer as soon as possible.
Unreasonable demands on a policyholder to prove a claim
The insurance company is responsible for investigating a claim. While the company can request information from you to validate the claim, this information should not be unreasonable.
When the insurance company demands seem unreasonable, hire a lawyer. Your lawyer will review the demands and look for any inconsistencies or items of concern. If the company is acting in bad faith, your attorney will point it out and seek justice for you.
If you need a trusted attorney to guide you through your insurance process, contact Gore & Kuperman. We’re a team of Virginia and D.C. lawyers ready to protect your rights and make sure the insurance company upholds their end of the insurance contract.