11 Signs Your Insurer is Acting in Bad Faith

Good insurance companies treat you fairly and ethically. Bad insurance companies make you feel like you’ve done something wrong.

When does a normal insurance investigation cross into “bad faith” territory?

What’s the difference between a slow claim and a bad faith insurance claim?

Today, we’re explaining the top 11 most common signs your insurer is acting in bad faith.

Denying Your Claim Without Good Reason

If an insurer has denied your insurance claim without giving a good reason, then your insurer could be acting in bad faith.

State insurance laws require insurers to provide a reason for each denied claim. If there isn’t a good reason, then the insurer cannot deny the claim.

Your insurer must also provide documentation for the denied claim upon request. All reputable insurers provide documentation when denying your claim – like detailed information about why your claim was denied. They should send you a denial letter that quotes your policy language to explain the denial to you.

Unusually Long Investigation of Your Claim

Is your insurer taking a long time to investigate your claim? Is your insurer dragging out your claim or demanding excessive evidence with no apparent reason?

It could be a sign your insurer is acting in bad faith. When an insurer takes an unusually long time to investigate your claim, they could be delaying your claim in the hopes you’ll accept a reduced offer. Or, they could be trying to frustrate you, trip you up, or find some excuse to deny your claim.

Unusually Short Investigation of Your Claim

In other cases, the insurer takes too little time to investigate your claim and seems to not care about certain details of your claim.

Your insurer may have preconceived notions of the validity of your claim, leading them to conduct a basic investigation before denying your claim without good reason.

Insurers have an obligation to investigate claims. If the insurer doesn’t adequately investigate your claim within an ordinary length of time, your insurer could be acting in bad faith.

Reducing Your Payment Without Good Reason

You may have expected to get $100,000 for your property damage insurance claim, but your insurer only offers $25,000.

If the insurer provided a reason – like the damage was caused by a non-covered peril – then that may be valid. However, insurers who offer a low payout without providing a reason may be acting in bad faith. Like a denied claim, a reduced claim without good reason could be a lazy attempt by the insurer to save money.

Demanding Excessive Proof

You are required by law to provide proof of the insurance claim to your insurer.

You may provide photos, documents, receipts, videos, and other evidence proving the incident took place and on the date and time it took place.

However, when an insurer demands excessive proof, it could be a sign they’re acting in bad faith.

Insurers may demand excess proof when they’re trying to find a reason to deny or reduce your claim. They may be trying to frustrate you with a lengthy claim investigation. Or, they might make you feel like you’re guilty in the hopes that something turns up during the investigation – even if that thing has no relation to your claim.

Failing to Pay the Agreed Amount

Some insurers practice in good faith through the entire claim process – only to act in bad faith during the actual payment process.

Insurers may fail to pay the agreed amount on the date you expected, for example. Or, in some cases, insurers may fail to pay the settlement within a reasonable length of time at all. The insurer may be dragging its feet on sending out a payment.

In some cases, the insurer has a cash flow problem: if your insurer recently faced a large natural disaster over a large portion of its customer base, for example, your insurer may be struggling to pay all of the claims from policyholders in your area.

Delayed payments could be a sign you have a bad faith insurer – or your insurer nearing bankruptcy. Neither are good for the future of your insurance claim.

Threatening You in Any Way

When an insurer threatens you, it’s a sign your insurer is acting in bad faith.

Insurers may threaten to reduce your claim if you hire a public adjuster, for example. Or, they may warn you against getting a third party estimate for repairs to your home.

In these situations, the insurer is threatening you to protect their own best interests. They want to pay you as little for your claim as possible, so they threaten you and hope you don’t understand your rights as a policyholder.

Denying Your Request for Documentation

As a policyholder, you have certain rights under insurance laws. One of those rights is to receive documentation when you request it.

If an insurer denies your claim, for example, then you can request documentation explaining why your claim was denied.

If your insurer denies your request for documentation, then they may lack a good reason to deny or reduce your claim, which means they’re acting in bad faith.

The insurer may believe you’ll accept the denial or reduction of your claim at face value. Don’t let them think they’ll get away with it.

Attempting to Blame the Policyholder

Bad faith insurers may accuse the policyholder of insurance fraud, claim they failed to maintain their property, or reference multiple parts of the insurance policy to justify a lower payout.

When your insurer attempts to blame the policyholder without good reason for that blame, it’s a sign they may be acting in bad faith.

Their Claim Denial References Multiple Parts of Your Insurance Policy

Insurance policies are complicated, and most homeowners don’t fully understand what they mean. There’s complex terms, jargon, and legalese in your insurance contract.

Insurers may try to take advantage of this fact by referring to multiple parts of your insurance policy. They might assume you don’t understand your coverage, using complicated terms to justify a denied or reduced claim. They often use wording from your contents coverage to deny your dwelling coverage. Make sure you know where the wording is being pulled from in your policy.

Did your insurer cite multiple parts of your policy to justify denying your claim? They may be taking a “throw everything at the wall and see what sticks” approach, overwhelming you with complex terms to avoid paying your claim.

Check your policy thoroughly. Or, consult with a lawyer or public adjuster to verify the policy language.

Poor Communication & Long Response Times

On its own, poor communication isn’t a sign your insurer is acting in bad faith. Some insurers are busy or bad at communicating.

However, insurers have a legal obligation to respond to your concerns in a reasonable length of time. Insurers that fail to do that may be acting in bad faith.

When you contact your insurer to report a claim, for example, the insurer must process that claim within a certain length of time. The specific length of time varies from state to state: some states have a specific limit (like 30 to 60 days) while others simply require a “reasonable” length of time.

A Bad Faith Insurer’s Worst Nightmare: Clients Who Hire a Public Adjuster

Bad faith insurers don’t like when policyholders hire a public adjuster. It means they’re fighting back against their bad faith practices.

When you hire a public adjuster, you’re hiring someone to represent your own best interests in the insurance claim – not your insurance company’s best interests.

Your insurance company has an adjuster, and that adjuster’s role is to pay you as little for your claim as possible.

By hiring your own adjuster, you get someone in your corner representing your best interests. Someone that reads insurance policies every day. Someone that knows what to expect next in the claims process.

Your public adjuster can challenge your insurer’s estimates, negotiate with your insurer on your behalf, provide documentation proving every penny of damage, and fight back against bad faith practices.

Don’t let your bad faith insurer push you around or take advantage of your inexperience.

Schedule a free, no-obligations consultation with a public adjuster today by contacting ClaimsMate.

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How to Handle a Low Offer from Your Home Insurance Company: Proven Tips & Steps to Take

A lowball offer may be an attempt to take advantage of your inexperience. It might convince you that your claim isn’t legitimate, or that you deserve a reduced payout. Policyholders will often try to find the cheapest labor to match that approved amount. You should be able to hire anyone in that area, not just a jack of all trades. Professional roofing contractors and other general contractors are what you deserve as a policyholder.

Fortunately, there are proven ways to fight back against lowball offers from your insurance company. Keep reading to find out the steps to take after your insurance company’s lowball offer – and proven tips for navigating a low offer from your home insurance company.

Review your Policy

Before challenging your insurer’s offer, it’s best to understand your coverage from front to back.

Review your insurance policy to ensure you understand what’s covered and what isn’t. Make sure you understand any exclusions. Look up any terms you don’t recognize. Know that to maximize your claim, you have to understand the contract between you and your insurance company. This is what your insurance policy is… a contract.

Review your Insurance Company’s Reason for the Lowball Offer

Generally, your insurer will provide documentation to justify the low offer. They may claim certain damages occurred because of an excluded peril, for example, or that other damage was caused by poor maintenance or “wear and tear” on your property due to age.

Review your insurance company’s documentation and compare it to the information in your insurance policy. Is there a justifiable reason for the denial? Most public adjusters know the difference between “wear and tear” and new damages and they know how to prove it to your insurance company.

Document Everything and Re-Approach Your Insurer

To receive a fair amount for your insurance claim, you need to provide evidence of the condition of your property and after the loss, along with the cost of restoring your property to pre-loss condition. If you fail to provide evidence, your insurer may send you a low offer.

Start by listing pre-loss conditions for your home. What condition was your property in before the loss? How much was your property worth before the damage occurred?

To justify the pre-loss condition for your property, use evidence like the following:

• A house appraisal
• A home inspector’s report
• A recent assessment of your property – say, if you just refinanced
• The listing for your home
• The original house plans

Then, document any costs you’ve put into your home – including repairs or renovations before and after the loss:

• Invoices from independent contractors
• Receipts for repair or replacement materials from the hardware store
• Any other costs you paid before the loss to increase the value of your home
• Any other costs you paid after the loss to repair the home to pre-loss condition

Once you’ve organized all this documentation, send it to your insurer. If you genuinely have good evidence of a legitimate claim, then your insurer will struggle to deny or reduce your payout.

Remember: the more evidence you can provide, the better. The trick is knowing when to provide this evidence so that you don’t complicate your claim or cause it to go to the bottom of the pile. Some adjusters get over worked and tend to close the claims that are the easiest to close.

Watch for Warning Signs of a Low Offer

One of the problems with a low offer is that it may not seem like a low offer.

In fact, many insurers dazzle you with a number that seems big in the hopes that you’ll accept the offer and close the claim quickly. In reality, the insurer wants to limit its liability as much as possible.

Warning signs of a low offer include:

1. The insurer failed to sufficiently investigate the claim, taking very little time to determine the facts of the claim.
2. The insurer ignored certain damages or left damaged areas of your home out of their initial estimate.
3. The insurer company repeatedly asks you to accept the offer or tries to convince you that this is the best offer you’ll get.
4. The insurer asks you to get three quotes or estimates from contractors right after a storm or catastrophic event. They will always accept the lowest of the three and that contractor has often underbid the job in order to get your business. They always come back with additional charges later and your insurance company might not approve them, leaving you with an unfinished repair and no additional money to make those repairs.
5. You are unable to hire most licensed and insured contractors that you speak with for the repairs.

3 Dangers of a Lowball Insurance Claim

A lowball insurance claim offer means less money to repair and recover after a loss. However, it can also complicate many aspects of your claim – and even compromise the future of your house.

Some of the dangers of a low insurance company offer include:

• Being forced to cut corners on parts and labor. If your insurer paid $5,000 to repair your roof but your roofer tells you it will be $20,000, then you may be tempted to use cheap parts or labor. Cutting corners on repairs could compromise the structural integrity of your home. Cheap roofers often don’t install the roof correctly and then if there is damage again, the insurance company will deny the claim for an “improper install”.
• Difficulty finding contractors to do the work. If your insurer insists it costs $2,000 to replace your floors but contractors are quoting you $10,000, then you may struggle to find a contractor to do the work. You are often left with unskilled labor and unfinished repairs.
• Paying out of pocket when the insurer should rightfully cover everything. Ultimately, a lowball insurance claim could force you to pay out of pocket for repairs that would normally be covered. You pay for home insurance, and you deserve the payout you paid for.

Other Steps After a Lowball Offer: What Are My Options?

What are your options after a low insurance offer? What can you do to push back against your insurance company?

Step 1) Review your claim. Check your policy’s coverage, then check your claim and the reasons justifying your lowball offer. Before you file a formal dispute with your insurer, you need to ensure you understand everything about your claim from start to finish. There could be a legitimate reason for the denial or lowball offer – like documentation your insurer failed to receive.

Step 2) Ask for your insurer to review your claim. Contact your insurance company’s adjuster and ask them to review your claim. The adjuster may have made a mistake, missed a crucial piece of evidence, or failed to add a certain amount of damage to the claim. The insurer may re-send the original adjuster to your property to review the claim. Or, they could send a new adjuster or a building consultant.

Step 3) File a formal dispute against your insurer. If you’re still unhappy with the way your claim was handled, then file a formal dispute against your insurer. All insurers have a formal process for handling disputes. The dispute process may involve hiring a third party, pushing your claim to someone with higher authority (like a manager), or completing a full review of your claim.

Step 4) Hire your own public adjuster. A public adjuster could double or even triple your insurance payout by spotting items your insurer missed – or deliberately ignored. Public adjusters are trained insurance industry professionals who work on your behalf and represent your best interests. A public adjuster can review your claim, assess damages, write legitimate estimates and negotiate with the insurer on your behalf for a higher settlement.

Step 5) File a complaint with your state. If you’re still unhappy with your insurance company, then file a complaint with state authorities. Each state has its own insurance commission, and this insurance commission handles complaints from insurers across the state.

Step 6) Consider hiring an attorney. If you still haven’t experienced a resolution to your claim, then consider hiring an attorney. An attorney can explain the pros and cons of suing your insurer, along with the likelihood of winning your case. Be prepared to wait for the settlement for over a year in most cases. This should be your last step, when all else has failed.

Hire a Public Adjuster to Fight Back Against a Low Offer

Dealing with all of the steps above can be intimidating – especially if you’ve never dealt with a major homeowners insurance claim before.

Fortunately, help exists in the form of public adjusters.

Public adjusters work on your behalf – not your insurer’s behalf. They negotiate with your insurer on your behalf to obtain a higher settlement.

A public adjuster can:

• Identify the intricate details and coverages of your insurance policy and use your policy language to your benefit
• Provide proof of these damages in a timely fashion to your insurance company to maximize your coverage and payout
• Demand that your insurance company make a full payment for your loss within the time frames allowed by state laws
• Write a valid repair estimate that will include all proper repair methods so that you have enough money to cover skilled labor
• Document everything and manage the rebuilding or repair process to ensure a smooth claim from start to finish

Discover how a public adjuster could help you obtain the highest possible payout for your insurance claim.

Contact ClaimsMate today for a free consultation with a public adjuster.

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