http://www.kenniffonline.com/insurance-profits-2008/
What is Insurance Bad Faith?
It is bad faith to violate a contract that you’ve signed. When we buy insurance – whether it is auto insurance, homeowner’s, health, or any other type – we agree to pay premiums of certain amounts by certain dates. For their part, the insurance company agrees to pay any legitimate claims we might make on that policy.
From the beginning of an insurance contract, the company and the insured have opposing interests.
· The insured want financial protection against future mishaps or catastrophes such as a car accident or a hurricane
· The insurance company wants to make a profit, and to do that, they invest the premium money and receive interest on it. The more money they can invest, the more profit they make, and the better they look to their shareholders. Paying out claims to their policy holders reduces the amount of money they can invest.
This is a situation ripe for bad faith. It occurs any time a legitimate claim:
· Is denied
· Is delayed
· Is underpaid
Insurance Adjusters
The job of an insurance adjuster is not what it appears to be from the viewpoint of a policy holder. Although most adjusters are courteous and pleasant, they are not trained or paid to give you fair compensation. They are required to offer you as little as they think you will accept. Their pleasantness is designed to lower your guard. The insurance company hopes you will accept a lowball offer, and many people do – not knowing that they could use an insurance bad faith attorney to help them obtain a more just amount.
The Allstate Battle
In the 1990s, Allstate hired a New York company to redesign its claims-handling process. The new process pays reduced amounts on claims without consideration of the claim’s merit. Then any policy-holder who requests a larger amount is taken to court. The name for this is “Deny, Delay, Defend”.
In January, 2008, the Florida Office of Insurance Regulation subpoenaed Allstate for a report from the firm they hired to do the redesign. Until they comply with that subpoena, Allstate may not issue any new policies in Florida. Other insurance companies have done similar redesigns and are making record profits. But policy holders are left unable to repair their homes or pay their medical bills.
Most laws, such as those in Florida, require certain behavior from insurance companies when a claim is submitted. This includes things like:
· Start out with an assumption that the claim is valid, rather than devising reasons to not pay it
· Do a full investigation of the claim
· Do that investigation (or make a payment) in a timely manner
· Make appointments needed for that investigation at reasonable times
· Keep the claimant apprised of the claim’s progress
· Explain any claim denials in writing that gives detail on which part of the policy was the basis for denial, which specific facts, or which laws
Protecting Yourself from Insurance Bad Faith
It’s interesting and poetically just that the best way to protect yourself is to avoid any behavior that could be characterized as bad faith. Don’t give the insurance company any ability to pin that on you. Therefore,
· Be truthful in answering all reasonable questions
· Be prompt in submitting your claim
· Be available to give more information or be present at inspections (at reasonable times)
· Keep all appointments
About the Author
If you seem to be fighting a losing battle, by all means consult an experienced insurance bad faith attorney.
Farmers insurance profit sharing 2008 talent contest #2