Insurance can protect people and businesses from liability. It can also help cover unpredictable losses, such as storm damage to residences or business facilities. Policyholders pay for coverage and then file claims when they experience certain qualifying circumstances.
Laws regulate the insurance sector and generally require that companies uphold their policies in good faith. Unfortunately, bad faith insurance practices are somewhat common. Companies may deny valid claims or unfairly delay payouts. Other times, insurance professionals may offer settlements as a means of limiting company losses.
Is a low settlement indicative of bad faith insurance practices?
Settlements can be inappropriate and unfair
In theory, insurance settlements are mutually beneficial arrangements. The party filing the claim receives the financial support that they require, while the insurance company limits long-term liability.
Frequently, settlement offers are for substantially less than the maximum amount of coverage available through a policy. A low settlement can represent bad faith on the part of the insurance company.
If an adjuster makes a settlement offer that they understand is unreasonably low and likely to leave an individual or business with many uncovered losses, that could constitute bad faith. In some scenarios, people and business leaders who accepted unfairly low settlement offers may have the option of pursuing a bad faith insurance lawsuit against the company.
Reviewing policy paperwork, settlement documents and other records with a skilled legal team can help frustrated policyholders determine if a settlement is indicative of bad faith practices on the part of an insurance company. A lawsuit may be possible in cases where insurance companies do not uphold their obligations in good faith.