Imagine this: you’ve been in a car accident and you file an insurance claim, expecting your insurance provider to help you through this difficult situation. Instead, your insurance company denies your valid claim without a clear explanation or significantly lowers your settlement offer. If this sounds familiar, you may be facing insurance bad faith tactics designed to avoid paying policyholders the money they rightfully deserve.
Understanding the red flags that mean your insurance company is acting in bad faith is crucial. When an insurer fails to honor its obligations under a policy, it can leave policyholders struggling with financial losses, stress, and uncertainty. Knowing your legal options can make all the difference. Below, we’ll explore clear signs that your insurer’s actions may be unlawful and what legal guidance you can seek to fight back.
1. Unreasonable Claim Denial Without Valid Reasons
One of the biggest red flags of bad faith practices is when an insurance company denies your claim without providing valid reasons. While insurers have the right to deny claims that lack merit, they are legally required to offer a clear explanation when doing so.
Common signs include:
If your insurance company refuses to provide documentation supporting their denial, they may be acting in bad faith.
Insurance contracts outline policy terms, and many insurance companies fail to honor them, acting in bad faith.
Scenario:
After a serious truck accident, James filed a claim with his insurance provider, expecting them to assess the damage and process his compensation. He provided evidence such as photos from the scene, a police report confirming the other driver’s fault, and repair estimates.
Instead of a fair review, James received a claim denial within days—shockingly fast for such a complex insurance claim. There was no clear explanation and no reference to policy provisions. Confused, he contacted the insurance adjuster, who dismissed his concerns with vague statements like, “Your insurance policy doesn’t cover this,” without citing a valid reason.
When James pressed for details, the insurer dodged his calls and emails, offering no clear explanation for their decision. The lack of investigation and refusal to discuss the matter were clear red flags of bad faith tactics—a deliberate attempt to avoid paying a valid claim without cause.
2. Excessive Delays in Processing Your Claim
Insurance companies are required to handle claims promptly, but some engage in bad faith tactics by dragging out the process unnecessarily.
Unanswered phone calls or repeated requests for the same information can indicate intentional stalling.
Excuses for delays such as understaffing or an “overwhelming caseload,” do not justify failing to process a claim on time.
Scenario:
After a severe storm damaged Sarah’s home, she promptly filed a claim, submitting photos, repair estimates, and a detailed damage report from a licensed contractor. She expected her insurance carrier to handle the claim promptly, but weeks turned into months with no progress.
Each time she followed up, the insurer requested more documentation—some of it identical to what she had already submitted multiple times. First, they needed “clearer” photos. Then, they claimed they were missing her contractor’s report, even though she had sent it twice. Later, they insisted on an additional inspection, further delaying the settlement.
With her home in urgent need of repairs, Sarah felt trapped. The excessive delays were not accidental—they were a bad-faith tactic designed to wear her down, pushing her to either give up or accept a significantly lower settlement than what she rightfully deserved.
3. Offering a Settlement That Is Significantly Lower Than Your Claim’s Worth
Another common bad faith tactic is when an insurer tries to lowball policyholders by offering settlements that are far below the actual value of their claims.
An insurance adjuster may claim your damages are worth much less than they are, without providing valid reasons.
The insurer may pressure you into accepting a low offer, making it seem like the only option.
Scenario:
Mark suffered serious injuries in a car accident caused by another driver’s negligence. With mounting hospital bills, physical therapy costs, and lost wages, he filed a claim with his insurance provider, expecting fair compensation under his insurance policy.
Instead of a reasonable settlement, the insurer offered a payout that barely covered his initial hospital visit while disregarding the costs of ongoing treatment, rehabilitation, and lost income. When Mark questioned the amount, the insurance adjuster brushed him off, claiming it was the best offer he would get.
Despite providing clear documentation of his injuries, medical records, and proof of lost wages, the insurer refused to budge. Their lowball offer was a blatant attempt to undervalue his valid claim, forcing him to either accept far less than he deserved or fight a long legal battle.
4. Ignoring or Refusing to Communicate
A reliable insurance carrier should maintain open communication with policyholders. When an insurer ignores phone calls, emails, or letters, it raises serious concerns about their handling of your claim.
Signs of communication breakdown:
Adjusters stop responding to inquiries.
Your insurer avoids scheduling necessary meetings or inspections.
They continuously transfer your case to different representatives.
Scenario:
When a fire damaged Lisa’s small bakery, she immediately filed a property damage claim, hoping her insurance carrier would help her recover. At first, the insurer responded promptly, requesting initial documents and assuring her that the claim was being processed.
Then—there was complete silence.
Weeks passed with no updates, no returned phone calls, and no responses to her emails. Each time she reached out, she was met with excuses or outright ignored. Her business, which relied on daily operations, remained partially shut down, leading to significant financial losses.
Many insurance companies use this tactic to wear down claimants, hoping they’ll give up or accept a lower payout.
5. Misrepresenting Policy Terms or Laws
Some insurers engage in deceptive practices by misrepresenting policy provisions or legal requirements to avoid paying claims.
Examples of misrepresentation:
Stating that certain damages aren’t covered when they are.
Incorrectly telling you that you’re not entitled to compensation under your policy.
Falsely claiming legal limitations prevent your claim from being paid.
Scenario:
After a fire damaged Daniel’s home, he filed a claim, confident his insurance policy covered fire-related losses. But the insurance company denied it outright, claiming fire damage was excluded.
Confused, Daniel reviewed his policy terms—and fire damage was clearly covered. When he pushed back, the insurer dodged calls and refused to acknowledge the coverage. This wasn’t a mistake; it was a deliberate act of deception commonly used by insurance companies.
Legal Protections Against Bad Faith Insurance Practices
Insurance companies are legally required to handle claims fairly, but the specific laws governing their conduct vary by state. These regulations exist to ensure that policyholders receive the coverage and compensation they are entitled to under their insurance policies.
Key legal obligations for insurers generally include:
Timely Response: Insurers must acknowledge and respond to claims within a reasonable timeframe.
Fair & Thorough Investigation: Insurance companies are required to fully investigate claims before making a decision.
Honest Communication: Misrepresenting policy terms or facts related to a claim is prohibited.
Reasonable Settlement Offers: Insurers cannot undervalue claims by making unfairly low offers.
When an insurance provider fails to meet these legal standards, policyholders have the right to take action. Many states allow individuals to file bad faith lawsuits against insurers that engage in deceptive or unfair practices. Seeking legal representation can help policyholders navigate their rights and hold insurance companies accountable.
Protect Your Rights—Contact Bourassa Law Group
If you suspect bad faith in your insurance claim, you don’t have to face it alone. Dealing with an uncooperative insurance provider can be overwhelming, but legal action can hold insurers accountable.
At Bourassa Law Group, our attorneys are committed to helping policyholders fight unfair denials and delays. Contact us today for a free consultation to assess your case and provide guidance on your next steps.
1-800-870-8910