6 Common Bad-Faith Issues in Commercial Insurance
In an attempt to protect its own profits, a commercial insurance company may engage in bad-faith practices when handling a claim. Bad faith means that the company is breaching its legal obligation to handle a claim in good faith, or honestly and ethically according to Arizona’s insurance laws. If you need to file a commercial insurance claim, such as a workers’ compensation claim, look out for these common bad-faith issues.
Failure to Fully Investigate
An insurance company has a responsibility to properly and thoroughly investigate the claim being made. This is the only way that the insurance company can properly process the claim. A full investigation may involve obtaining documents and evidence from the claimant, returning to the scene of the alleged incident, and hiring experts for more information. If an insurance company fails to properly investigate, it may not have all the facts that it needs to make an informed decision.
Commercial insurance companies must respond to, investigate and decide on claims submitted to them within a reasonable amount of time. In Arizona, state law gives insurance companies 10 working days to respond to demand letters and 30 days to investigate. If an insurance company appears to be taking too long to respond to your claim or send a payout, it may be a sign of insurance bad faith. Contact the company to find out what’s taking so long. If they do not have a valid reason to extend an investigation, you may have grounds for a bad-faith claim.
One of the most common forms of commercial insurance bad faith is a company wrongfully denying a valid claim. Refusing to pay a claim that is valid and falls within the insurance policy is a type of bad faith that could get in the way of your financial recovery. Read the terms of the policy carefully, then contact the insurance company to request an internal review. If the internal review does not reverse the decision, seek help from an outside organization, such as a lawyer or your state Department of Insurance.
Inadequate Settlement Offers
Another common example of insurance bad faith is an inadequate or “lowball” settlement offer. The insurance claims adjuster may offer less than the claim is actually worth to see if the claimant knows the true value of his or her injuries or losses. If negotiating back and forth with the commercial insurance company does not result in an adequate or reasonable offer based on the extent of your losses, this could be insurance bad faith.
Deceptive practices by a commercial insurance company can take the form of misrepresenting the terms on a policy when a business owner purchases it, misinterpreting the terms during a claim, intentionally failing to inform a business about a deadline or failing to disclose the existence of coverage. In addition, an insurance company may try to avoid paying by enforcing exclusions that the commercial insurance policy does not contain.
In some bad-faith scenarios, a representative or claims adjuster from the insurance company will threaten, harass or bully the claimant into accepting less than he or she deserves. An insurance company or its representative should never make any threatening statements to you or a third party, including threats to file charges against you for submitting a claim.
What to Do About Commercial Insurance Bad Faith
If you suspect an insurance company of engaging in any type of bad-faith practice or behavior during your commercial insurance claim, contact a Phoenix insurance bad faith attorney right away. An attorney can protect your rights and force a commercial insurance company to handle your claim fairly and reasonably. An attorney can also file a bad-faith insurance claim on your behalf in pursuit of financial compensation from the insurer for its wrongful acts, in addition to the payout for your original claim. Contact Surrano Law Offices today for more information.