Insurance companies and "BAD FAITH"

Accusations of bad faith against insurance companies often amount to a claim of fraud, a deliberate misrepresentation of a material fact relied on by an individual to his detriment. While this is often the reality of the claim, fraud is always difficult to prove because it requires INTENT on the part of the liar.

In the insurance industry, whether it's dealing with alternate dispute resolution (such as mediation) or in cases that actually go to court, bad faith is looked down upon by insurance companies (not surprising) and decision makers, probably because of the difficulty of proving intent.

Insurance companies have discretion in what they will do to close a particular case and insurance company representatives will sometimes even admit that they will "punish" a person who asserts insurance company bad faith by settling only for a lower amount.

Insurance companies expect you to do all the work, gather all facts in support of your claim and PROVIDE THEM with those facts. Understand they will admit to as little as possible to be liable for as little as possible.

So here are a few steps to follow:

When you're fighting an insurance company, the first thing to know and establish is what contractual clause you are using to support your claim. Be specific because insurance companies are ONLY using the written word to establish whether you have a legitimate issue. If you can't find the particular clause, try to get help in finding it. If there is no coverage to begin with, there is no claim.

Next start information gathering. This will be unbelievably frustrating because you will do all the work and the insurance company will try to twist or ignore every fact you submit. Information for insurers is only used to establish a bottom line, how little they can close your claim for.

Establish a paper trail from day one. This will also be discouraged by insurance companies as they try to label you as being uncooperative. Recently I had one insurer blame the delay in processing a claim on the fact that I insisted that things be in writing. Upon review, however, ONLY AFTER SOMETHING WAS PUT IN WRITING DID I GET AN INSURANCE COMPANY RESPONSE. If you get authorization for something, confirm it in a letter sent to an insurance representative. If the insurance company "agrees" to something, put it in writing to confirm. Write, keep receipts, use certified mail and email, fax and get a fax receipt, make a folder...if it's not on paper it doesn't exist for insurance companies.

Insurance company representatives use a simple tactic, they equate calm for "reasonable" which results in our blood pressure, voices and accusations in rising. The reason they can do this is not because they have calm personalities, it's because they don't care about you or when you get what you need from them. Delays work to their advantage, putting you off, failing to pay, it all works for them. These delays are harder to justify if you have a record of every communication you have made with them and that doesn't mean a phone log.

Bad faith...okay, don't use those words, but understand that delays, lies, stalling, failure to return calls and badgering you about your truthfulness are often done in bad faith, they don't want to pay. Commit everything to writing from day one. Insurance people are phone people, they'll call you a lot once their liability (and your coverage) are established because the calls are used as evidence of their follow up skills. Anyone who has dealt with insurers knows that these calls are often non-productive, repetitive assertions of how you are lying, faking, or trying to rip them off, but without a written record all that's apparent is that they called. Repetitive calls can often amount to harassment so document EVERYTHING so that you can show a pattern amounting to bad faith rather than using those words.

Documentation is an insured's best defense, the insurance policy, the liability, the way the company handles the claim AND if the insurance company is trying to lowball you it works to have documentation to show why you accepted the lowball offer.

One final note, insurance companies are always willing to walk away, after all, if you can't speak to them they don't have to pay. If you choose to walk away, have your next step ready whether it is to see and hire a lawyer or to expand your notification process to your State Insurance Department. You can also report them to the better business bureau as well as your Secretary of State. Know who you will speak to when discussions (which occur in writing) fail. This will give you the same edge, yes, you can both walk away.

Don't accuse an insurance company of bad faith, prove it through their actions. Is there bad faith? So much. But beat them at their own game and don't assert it, prove it.