An insurance company is acting in bad faith when it does not treat your claim honestly, fairly, or on time, even though it has a legal duty to do so. If you are a licensed driver, the law requires you to carry a minimum amount of auto insurance.
When another driver causes a crash, and you are hurt, you have the right to seek payment through that driver’s insurance. If that driver has no insurance or not enough, you can turn to your own uninsured or underinsured coverage.
When the insurance company does not handle your claim the right way, you may have grounds for a bad faith claim. That means the company may have broken its duty to you. This is serious. Insurance is a contract. It is a promise. They are not allowed to ignore that promise.
Below are the main signs that something is not right.
Making Unreasonable Demands for Documents
After a crash, the insurance company will ask for records. This is normal. They need medical bills, repair estimates, and proof of loss. That is part of investigating whether the claim is valid.
However, sometimes they might just start making very unreasonable demands. For instance, they start asking for papers that have absolutely nothing to do with the accident at all. They would even keep asking you for more and more, even if you’ve sent all that they need to begin processing your claim.
This is a very tactical effort on their part to frustrate you, and of course, it is not considered fair conduct by law.
Failing to Communicate With You
If it becomes very hard to reach your insurance representative, that is a warning sign. Maybe your calls are not returned. Maybe you cannot get a clear update about what is happening.
Insurance companies know that when money is tight, people feel pressure. They also know that the longer they wait, the longer they keep their money. Silence can be a tactic. It can push someone to accept less than they deserve just to end the stress.
A lack of communication is not just rude. It may point to bad faith.
Offering You a Very Low Settlement
It is common for insurance companies to make a first offer that is low. Very low sometimes. So low it does not cover the real cost of medical care, lost wages, and repairs.
You do not have to accept the first offer. You have the right to negotiate, usually through an attorney. If the offer feels far below what your losses truly are, it may not be an accident. It may be a strategy.
Insurance companies sometimes hope you do not know the value of your claim. Or that you are too tired to argue. Pressure may follow. They may say this is your only chance. That is not always true.
Denying Your Claim Without a Clear Reason
If your claim is denied, the insurance company must explain why. The explanation should be specific. It should refer to the policy language and the facts.
If they deny the claim with vague words or no reason at all, that is not proper handling, and you can take them to court for that. A denial must have a factual basis. The company should have completed a full investigation before making that decision.
An inadequate investigation, or no clear justification, can be a strong sign of bad faith.
Misrepresenting What Your Policy Covers
Sometimes an insurance company may tell you your accident is not covered, even when the policy language suggests it is. They may twist wording or ignore important parts of the contract.
Most people do not read insurance policies every day, mostly because the language can be confusing. If something they say does not match what you understood when you bought the policy, that is a moment to pause.
Misrepresenting coverage is not allowed. A policy is a written promise. It cannot change depending on what benefits the company.
Failed to Pay Entirely
The insurance company might not even pay you a dime at all in some cases. They may know the claim is valid and still refuse. Or they may continue making excuses, month after month.
If you have waited an unreasonable amount of time for payment on a legitimate claim, that is not a normal delay. That may be bad faith conduct.
Insurance exists to provide protection. When payment never comes, the contract is being broken.
Key Takeaways
- Insurance bad faith happens when a company handles a claim unfairly, dishonestly, or with unreasonable delay.
- Unreasonable document demands and poor communication are warning signs.
- Delays in investigation or payment can violate legal duties
- Extremely low settlement offers may be tactics, not fair evaluations.
- Denials without clear reasons or proper investigation are red flags.
- Misrepresenting what your policy originally covers is not lawful.
- If the company withholds your payment, you have the legal right to take them to court.
