Businesses typically carry multiple types of insurance. Different industries require different forms of coverage. Executives and owners may acquire business interruption insurance, liability policies and coverage to address professional errors.
Should an issue arise, the insured organization should be able to rely on its coverage to offset covered losses. Federal and state regulations require that insurance companies uphold their policies in good faith. Sometimes, bad faith practices complicate insurance claims.
The three scenarios below are relatively common and may require legal assistance to effectively resolve.
1. Misrepresenting the policy
Insurance professionals sometimes intentionally lie to policyholders about their coverage. They may claim that the loss is not eligible for coverage due to specific details about the situation. The goal is to deter people from following through with a claim that could otherwise be successful.
2. Delayed communication
Refusing to acknowledge a claim or communicate with the policyholder can also constitute bad faith insurance practices. By leaving emails and claims unanswered, insurance professionals hope to reduce the final number of successful claims.
People frustrated by getting the runaround sometimes give up instead of pursuing the coverage that they deserve. Insurance claims are subject to certain rules regarding turnaround time in most cases.
3. Offering unreasonable settlements
A settlement balances convenience with the need for a prompt payout. Insurance companies often offer settlements that are less than the full policy limits. When the settlement offer is also well below the total losses incurred, it may not be reasonable and appropriate.
Busy business leaders may not have time to micromanage insurance claims and deal with bad faith practices. Retaining legal support while dealing with insurance disputes can prove beneficial for those dealing with delays, misrepresentation or unfairly low settlement offers.