How to Deal with a Bad Faith Insurance Claim

When you buy an insurance plan, you expect protection and support from the insurance company. But as it happens, sometimes the insurance companies let you down. In such cases, you need to fight for your rights. Learn about the steps you should take to deal with and file a bad faith insurance claim. ~ Ed.

Getting insurance is important because it protects many important things in your life like your house, health, and even your car. 

You pay into your insurance plan every month, so you expect when an accident occurs and you file an insurance claim it will be covered. But what if your insurance company either refuses to extend your coverage or does not extend you the amount you were expecting? 

If you feel like you are being cheated by the insurance company or that they violated your policy, then your best bet is to file a bad faith insurance claim against the organization. 

In this case, you should go to an attorney and see if it’s possible for you to sue the insurance company to get the money you were promised so you can get your life back on track. 

This article will go over all you need to know when you’re faced with a bad faith insurance claim.

6 Steps to Filing a Bad Faith Insurance Claim

You depend on the insurance and put your trust in the insurance company. However, if the insurance company does not commit to their promise to support you, then you need to do something about it. Here are the steps and tips to help you deal with such cases.

Take a Look at What Your Policy Covers

First of all, you need to take a look at your insurance plan to see if you should be covered in the event of an incident. If your plan is meant to cover a specific incident, but your insurance company refuses to cover you then you could have a case for a bad faith insurance claim lawsuit. 

For example, if you pay into a house insurance policy that covers natural disasters you should be covered in the event something of that nature happens. If a tornado comes and damages your home but the insurance company refuses to pay for damages, then you could have a case against the company. 

On the other hand, if an incident happens that isn’t part of your plan odds are that you won’t be able to make a claim. For example, if you pay into an auto insurance plan that doesn’t cover vandalism and your car gets keyed, then you probably won’t be able to file a lawsuit against the company.

Compile All Documents of Your Claim

If you think you can file a lawsuit then the next step is to compile all the information about your plan and the claim that you filed with the insurance company. 

If you have a copy of your original plan, you need to make copies of it and have it on hand. Check if there were any amendments made to your plan, you should hold on to these too. Also, track down any proof of payments to the insurance company for your plan so you can prove that all your payments are up to date and your plan is still valid. 

Finally, you need to provide evidence of the claim that you sent off to the insurance company before it was rejected or not fully paid.

Compile All Documents of the Denial of Claim

When you file your insurance claim, your insurance company will either accept, partially accept or deny it. Before going to your lawyer with all your other documents, you’re going to have to get proof that your insurance company denied or unfairly partially accepted your claim. 

For example, if you get a bad illness and can’t work for a few months but your health insurance company denies your claim, they will send you a document outlining why they are rejecting your claim. In this case, be sure to keep copies of the original documents and if you tried to appeal the denial of the claim then hold on to these files as well.

Re-approach the Insurance Company

If you’ve already appealed your denial of the insurance claim and it was rejected again, you should book a preliminary consultation with a lawyer. You should do this so you can find out more from a bad faith insurance claim specialist about the fine print in your insurance contract and your legal rights in these sorts of situations. 

Once you’ve consulted the lawyer and they think you have a case for a lawsuit, you then can re-approach your insurance company to see if you can resolve the dispute. 

Sometimes the mere threat of taking the insurance company to court can make them cough up the money for your claim and the fact that you tried to appeal multiple times to the company can help you out in court. There is also the chance that the insurance company will offer a settlement but if this amount isn’t to your liking, you should proceed to take them to court.

Complain to the Department of Insurance

If you live in the United States, your state will have a Department of Insurance that helps regulate insurance. Similarly, in Canada, there is a federal Department of Insurance that has the same function. 

By filing a claim to this department, you can receive certain types of assistance to help resolve the dispute before going to court and they will also take note of your insurance company’s reaction to the attempted claim to see if they are acting criminally. 

The main service these departments offer is usually a settlement mediation. If you don’t think you have the time or resources to go through a full-court case, this could be a good solution.

File a Bad Faith Insurance Claim Lawsuit

Once you’ve gone to your insurance company multiple times and they haven’t offered to settle or provide you with the claim that’s entitled to you, it’s now time to take the company to court. 

When suing the company you should file for compensation for the claim you tried to file but also for any inconveniences or damages caused by the bad faith of the insurance company. 

If you’ve appealed to your insurance company and they eventually settle your claim after a while, you can still sue them for bad faith for all the time and damages you incurred trying to get the claim settled in the first place.

Wrapping It Up

Filing a bad faith insurance claim can seem like a daunting task but if you follow the standard procedure, it can be much simpler than it appears. 

First, take a look at your insurance plan to see if you should be entitled to your claim. Next, collect all the documents concerning your claim and its denial. Then you should re-approach the company to try to appeal your claim. 

At the same time, you should file a complaint to your local Department of Insurance for support. Finally, if you’ve exhausted all other means to get your claim, you need to take the insurance company to court under a bad faith insurance claim lawsuit. 

Don’t let insurance companies boss you around – if you think you’re in the right you need to fight back!

Over to you

Did you ever face a bad faith insurance claim? Share your tips and experiences in the comments to help others.