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Misrepresenting Policy Terms

Misrepresentation of the Terms of Your Insurance Policy

Insurance agents and company representatives, each for their own reasons, may sometimes negligently or deliberately misrepresent the terms of an insurance policy. When this happens, it often constitutes insurance bad faith, or a violation of the covenant of “good faith and fair dealing” implicit in a contract for insurance (insurance policy).

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Misrepresentation of Policy Terms by an Insurance Agent

An insurance agent is a middleman between you and your insurance company. It is the agent’s duty to provide you with the coverage you request and to give you accurate and honest information about the insurance product you’re purchasing. The agent, in theory, works for you; but, the agent is paid a commission by the company whose policy he or she sells. Because the agent’s income depends on you purchasing a policy, he or she will typically focus on making the sale. To do so, the agent may misrepresent the policy’s terms. You may continue paying premiums for years, only to discover when you experience a loss that it is not covered.

Misrepresentation by an insurance agency can result in financial disaster and is a type of insurance bad faith. Agent misrepresentation may result in your having insufficient high coverage limits and/or unwanted policy exclusions. If the agent makes a material misrepresentation of fact when taking your application, any future claims you make may be adversely affected and possibly denied.

Misrepresentation of Policy Terms by an Insurance Adjuster

Another type of bad faith insurance misrepresentation may occur when you are dealing with an insurance adjuster after filing a loss claim. It is the adjuster’s job to investigate your claim and determine the amount that the company will pay. The adjuster is working to protect the interests of the insurance company, and it is in the company’s interests to pay out as little as possible. In order to persuade you to accept a lower payout than you should rightly receive, or to deny your claim outright, the adjuster may erroneously state that all or part of your loss is not covered by the terms of your policy, when in fact it is. In many cases, the policy has been deliberately written in ambiguous or confusing language that makes it possible for the adjuster to offer a skewed interpretation to the company’s advantage and your disadvantage. As with misrepresentation by an insurance agent, adjuster misrepresentation that results in your being denied an adequate payment of your claim is an example of insurance bad faith.

You May Have Recourse for Policy Term Misrepresentation

If in the course of trying to collect on an insurance claim you discover that you’ve been misled by an agent or an adjuster as to the terms of your policy, you may have recourse. With an experienced insurance bad faith attorney working for you, you may be able to compel the company to pay the full amount of your loss, either through negotiation or by taking the matter to court.

Damages Available to You

You may be eligible for damages if your policy terms were misinterpreted and you were harmed by it. Such damages could include contractual, extracontractual, and punitive damages. Below, we will discuss these further.

Contractual Damages

The amount of the claim that you were denied is what contract damages are based upon. Your policy details what your insurance was committed to cover. The insurance company may be mandated to pay you the full value of your claim with additional interest.

Extracontractual Damages

Extracontractual damages may be available to cover financial damages that were caused by the unreasonable handling of a claim. These may be recovered by hiring an attorney to defend your claim concerning the policy contract.

You may also be eligible for damages for emotional anguish and mental stress. Prologonged psychological anguish can be manifested in many forms, such as clinical depression, anxiety disorders, and sleep disturbances. Chronic stress has the potential to alter the brain chemistry and reduce its ability to produce hormones that stabilize moods. This kind of suffering may be eligible for compensation.

Punitive Damages

Punitive damages differ from contractual and extracontractual damages. While they focus on the losses due to the policy’s misinterpretation, punitive damages are available to punish wrongdoings. They are often applied so that the at-fault party is duly punished and in an effort to discourage similar future behavior.

Negligence Vs. Deliberate Misrepresentation (of insurance facts)

Negligent misinterpretation is similar to deliberate negligence, except the person who misrepresents the policy may not know that they are doing so. Deliberate misrepresentation means that the trust was recklessly disregarded.

Negligent Misrepresentation

If you have experienced negligent misrepresentation, you may wonder what a lawsuit might entail. To prove negligent misrepresentation, four things must occur. They are as follows:

  1. A defendant made a false statement that was construed as gross negligence about a very important fact.
  2. The defendant should have known or did know that the representation was false.
  3. A defendant purposefully made the misrepresentation to cause a plaintiff to take some action because of it.
  4. As a result of that the plaintiff was then injured financially because of the misinterpretation.

Deliberate Misrepresentation

Deliberate misrepresentation of an insurance policy means that you were intentionally mislead. When an insurance representative misrepresents the policy’s coverage to lure their clients into purchasing a policy with less coverage or features than they are promising, it is a case of insurance fraud, which is a crime. If you find yourself in this situation, it is important that you seek legal counsel.

Nationwide Insurance Bad Faith Law Firm in Phoenix, Arizona

Find the experienced, focused, and skilled legal representation you need to succeed in an insurance bad faith claim at the Surrano Law Offices in the Phoenix area. Our attorneys know the workings of the insurance industry from the inside out. We focus our practice on insurance disputes and have successfully recovered millions of dollars for clients in legal actions involving insurance company bad faith. You have paid for your coverage, and we are committed to seeing that you get it. Contact us today to protect your right to the recovery you deserve.