Key Takeaways
- Bad faith insurance occurs when an insurance company intentionally delays, denies, or mishandles a claim in violation of legal or contractual obligations.
- Not every denial, delay, or poor customer service experience qualifies as bad faith — some denials are legitimate under policy terms.
- Common signs of bad faith include vague or unjustified denials, delayed payments without cause, lowball settlement offers, ignoring communications, misrepresenting policy coverage, refusing inspections, or withholding documentation.
- Before calling a lawyer, policyholders should document all communications, review their policy carefully, and consider hiring a public insurance adjuster to help resolve issues.
- Legal help may be needed if the insurer clearly violates laws or rights, fails to act after the policyholder fulfills all obligations, or retaliates against the policyholder.
- Robinhood Adjusters can help prevent or resolve bad faith issues by managing communication, accurately documenting damages, and advocating for a fair settlement.
- Most claims can be resolved without going to court if handled professionally from the start.
From the mundane to the serious, be it a rogue baseball versus picture window situation or a terrifying house fire, your homeowners’ insurance should be there to help. They signal this with their umbrellas, tightly held hands, a chorus of farmers, letting you know that your insurance company is there for you and your family, ready to jump in and help when a Bad Thing happens.
But you know as well as I do that sometimes it just doesn’t work that way. Faced with mounting repair bills and the loss of beloved personal property, it can feel like your insurance company is stalling and hiding behind loopholes, deadlines, low-ball offers, or flat-out denials.
Let’s talk for a few minutes about “bad faith”. No, not the seminal psychedelic rock supergroup from the sixties, although they were pretty good, weren’t they? Am I aging myself here?
Anyway, “bad faith” in the not-so-awesome sense has a very real, very serious meaning.
An insurance company acting in bad faith may work to delay or deny any or all of your claim and compensation, misrepresent your coverage or policy, fail to investigate your claim, and even refuse to communicate with you, the policyholder.
There are many ways an insurance company may act in bad faith, but it’s important to remember that not every denial or miscommunication is actually bad faith. You could be denied for reasons the insurer deems valid, whether you missed a deadline concerning your damage, are simply not covered for a particular event, or their estimates of how much money you should receive are much different from what you perceive as fair.
This doesn’t happen every day. Most insurance claims don’t go down this path, but it’s good to know the signs of bad faith dealings and what you can do about them.
What Is ‘Bad Faith’ Anyway?
The dictionary at Law.com defines bad faith as “intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others.”
To put it simply, it’s when your insurance company fails to deal with your claim fairly, honestly, and promptly. They’re legally obligated to…not act like that.
Is any negative outcome bad faith? No. ‘Bad faith’ does not cover ‘they didn’t give me what I wanted.’ Nor does it mean ‘slow customer service’. It doesn’t even mean ‘the person on the phone had awful manners and no empathy’.
While customer service overall is an area of concern in the industry, it is not, in and of itself, ‘bad faith’. That’s more like poor training and not enough morning coffee.
Common Signs Your Insurance Company Might Be Acting in Bad Faith
So what are some signs your insurance company may be behaving badly? How can you tell you may have trouble brewing?
Here are a few red flags that may indicate they’re acting in bad faith:
- Denying your claim without a clear explanation
- Delaying payments without a good reason
- Offering far less than your documented damage is worth
- Ignoring your calls or written communications
- Claiming your policy doesn’t cover something that is covered
- Refusing to provide documentation for their decisions
- Not sending anyone to inspect the damage
If you see these red flags, you may not necessarily need a lawyer right away, but it’s not a bad idea to bring in some backup. Navigating an insurance claim can be daunting in the best of circumstances, but navigating your claim with added complications can go south fast. Or excruciatingly slowly, depending on the problem you’re having.
What You Can Do First — Before Bringing in a Lawyer
Don’t panic! You may not have to call in a lawyer right away.
Do pay extra attention, though.
Keep detailed documentation of all communications with your insurance company.
Follow up with everything in writing, and keep copies of everything.
Read and re-read your policy very carefully, taking note of what is covered, conditions of coverage, dates and deadlines, etc.
Consider contacting a public insurance adjuster. This is a smart first move because it can help differentiate between a mistake and a deeper problem.
If it’s just a mistake or even a failure in customer service, a public adjuster can help resolve the issue before it becomes a legal battle.
When It Might Be Time to Bring in a Lawyer
Of course, some situations may require the help of an experienced lawyer. If the insurer is clearly violating the law or your rights, you’ve done everything you can to fulfill your own obligations in filing your claim with no results, or you’re being threatened with retaliation, you will likely want to call your lawyer and get them involved.
If it comes to that, we’re here to help. We’ll help document your loss thoroughly and provide the supporting evidence your lawyer may need if the case goes to court.
How We Can Help You Avoid Getting to That Point
Robinhood Adjusters can get you to the finish line and help reduce the chances of bad-faith issues.
As a fully licensed local company with years of combined experience, we understand insurance. We know how to document everything with precision and clarity.
We handle all communications with your insurance company so nothing is misrepresented, misinterpreted or lost in translation.
Remember that most claims don’t have to end up in court, a lengthy, costly process. Your best protection is starting strong with an experienced, knowledgeable team.
Bad faith exists; it is a very real thing. But with the right team on your side, it’s much easier to see it and stop it before it spirals into a legal catastrophe.
If you’re having misgivings about how your insurance claim is being handled, or want to head that off before it even gets going, we’re here to help.
We speak insurance, and we’ve got your back.
