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How to tell if an insurance company is acting in bad faith

| May 4, 2020 | Property Damage Insurance Claims |

Insurance companies in Texas and throughout the country are required to act in good faith when settling a claim. This is because they have more knowledge than the average policyholder as well as greater financial resources than the average policyholder. Let’s take a look at what typically constitutes bad faith on the part of an insurance company.

A valid claim is denied without a good reason

To show that an insurance company acted in bad faith, you must be able to show that your claim was valid. You must then be able to show that an insurance company denied a claim or took other actions that were blatantly unreasonable. As a general rule, mere negligence on the part of an insurance company isn’t enough to prove that a provider acted in bad faith. Examples of actions taken in bad faith include failing to process a claim in a timely manner or failing to make a decision on a claim in a timely manner.

You’re generally entitled to a reason why a claim is denied

Generally speaking, an insurance company is required to tell you why a claim was denied. A lack of an explanation could be interpreted as an act of bad faith as determined by common law or by state statute. Insurance companies are typically required to have specific standards as it relates to evaluating a claim, and those standards will ideally form the basis of any decision to approve or deny a claim.

Insurance companies must pay out claims as quickly as possible

Even if a claim is approved, an insurance company might act in bad faith by not paying you in a reasonable amount of time. Your insurance policy may stipulate when payments are supposed to be made. State law may also provide more clarity about what constitutes a timely payment.

If you feel that you have experienced a bad faith insurance claims process, an attorney may help you take legal action against your provider. You may be entitled to compensation for actual losses as well as other damages.