Posted On 05.13.14 by in Blog
People are often surprised to hear that insurance “bad faith” – an insurance company lying, or concealing facts, etc – still happens today. After all, these companies build their reputations on being reliable, honest, and “good neighbors.”
A Massachusetts judge ordered American International Group Inc. to pay at least $7 million to a person who had been injured. That’s $7 million on top of the $3.6 million they already paid on behalf of their clients. Why? Here’s the story:
In 2008, AIG paid 3.6 million dollars to Odin Anderson for his injuries in a bus accident. The bus was insured by AIG. That was a fairly straightforward personal injury lawsuit with a fairly straightforward result. However, during this lawsuit, AIG made up claimed facts, and coached the bus driver to change his story. For example, AIG told the bus driver to say that Anderson “ran out onto the street.”
The judge over this case said that AIG executed “deliberate or callously indifferent acts designed to conceal the truth, improperly skew the legal system, and deprive the Andersons of fair compensation for their injuries.”
When an insurance company behaves in a dishonest way, conceals facts, or tries to commit fraud, that’s bad faith. For example, if your claims adjuster decides to withhold evidence during a settlement or court proceedings, that’s bad faith. One instance might be if an adjuster refuses to take important evidence into account when calculating your settlement.
If your adjuster won’t tell you why the settlement is so low, that may be a warning sign of bad-faith. When an insurance company makes profits the first priority, bad-faith is sure to follow.
Protect your rights by speaking with an attorney before you agree to any settlement.
The bottom line is that good faith insurers look for and find ways to pay claims properly and promptly. Bad faith insurers look for and find ways to not pay, or delay, or diminish, disapprove, or deny payment of claims, even unlawfully. Here are some warning signs of bad faith behavior:
An insurer trying to shift the blame and responsibility for investigation to the insured and away from the insurer.
Threatening to harm or sue or take legal action against the insured.
The same claims person handling both sides of the same claim or related claims.
Changing or altering policy coverage without the insured’s knowledge or consent.
Failure to live up to industry standards.
Significant increase in premiums as a result of making a claim where the insured was not at fault and in conflict with the industry standards.
Threatening to not play a claim at all if the insured does not agree to an initial offer.
Withholding information, or misrepresenting information that would be in favor of the insured.
Advising the insured to not hire a lawyer.
Failing to provide clear and reasonable explanation when denying or compromising an offer of settlement.
There are many other ways that insurance companies may try to take advantage of their own clients, especially in the case of injuries, where expenses are many times higher than property damage cases. You should not trust your own insurance agent to have your best interest at heart, since they have a financial interest in having as low claims as possible. You need to talk with an attorney who can advise you on what settlement amounts are appropriate and how to deal with the insurance companies.
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