Handling an insurance claim can be a lengthy and stressful process. It can take months to fully resolve the aftermath of a situation that necessitates insurance coverage. Frequently, claimants have to submit a request for compensation for every type of expense related to a claim.
Sometimes, insurance providers settle with those filing claims. They offer a lump-sum payment in exchange for a release from future liability. This arrangement can be mutually beneficial, but it can also leave the claimant without recourse if they have additional expenses.
Some people do not want to settle their claims, while others would rather be done with the process as soon as possible. They simply need the insurance company to approve a reasonable settlement amount. Unfortunately, insurance providers might drag out the claims process. They might also refuse to settle a large claim. Is a refusal to settle an example of bad faith insurance practices?
The details matter in bad faith insurance cases
Sometimes, it is perfectly reasonable for an insurance company to refuse to settle. The company might decide to take a dispute to court because there are questions about the validity of the expenses reported by the claimant. Other times, the company may have offered a settlement, but the settlement was unreasonably low. If the settlement amount is not as high as the applicable policy limits, there might be room to negotiate.
Many claimants and the lawyers representing them respond to a first settlement offer by countering it. The insurance company might then dig in its heels and refuse to negotiate. A low settlement can be a form of bad faith insurance, as it represents a failure to comply with the terms of the policy that the company issued.
The extent of the damages and losses reported and the amount of compensation requested, as well as the timeline for the whole process, can influence whether or not the situation constitutes bad faith insurance practices. In scenarios where reasonable professionals are likely to recognize that a settlement is appropriate and necessary, a refusal to settle might constitute bad faith insurance practices.
People frustrated by insurance company tactics often need help resolving their concerns. Reviewing the claims process so far and the total damages incurred with a skilled legal team can help someone establish whether a refusal to settle might constitute bad faith insurance practices. If it does, litigation might be an option, and a claimant could potentially receive far more compensation than they might otherwise receive as a result.