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Why Do Insurance Companies Sometimes Act in Bad Faith?

by | Sep 17, 2019 | Car Accidents

When you’ve been injured in an automobile accident, dealing with the recovery is bad enough. The situation can be even worse, though, if the insurance company isn’t holding up their end of the contract. Insurance companies have a duty to the policyholders to act in good faith when settling personal injury claims. This means that the insurance company is required to investigate, negotiate, and settle the claims. Insurance companies are expected to provide the necessary coverage when accidents happen. But this is not always the case. 

Remember: insurance companies are in the business of making money. It is a for-profit industry. Insurance companies make money by collecting insurance premiums, and in turn, the companies lose money when they have to pay claims. This, unfortunately, leads some companies and claims adjusters to engage in bad faith insurance practices.

What Constitutes Bad Faith?

In general, a bad faith insurance practice is one that is dishonest and unfair. It can be intentional, meaning that the insurance adjuster knew that their conduct was unreasonable at the time, but he or she did it anyway. Or, the bad faith can be professional negligence, meaning they failed in their legal and professional duty to process the claim in a timely and reasonable manner. 

Georgia law defines bad faith insurance as “any frivolous and unfounded refusal in law or in fact to pay according to the terms of the policy.” (King v. Atlanta Cas. Ins. Co., 631 S.E.2d 786 (Ga. App. 2006)).

What Are Some Examples of Bad Faith?

An insurer commits bad faith any time the company fails to uphold a duty to a policyholder, or when the company deliberately neglects a duty to a policyholder. This can happen during the handling of the claim, or it can be the behavior of the insurance agent. Here are some common examples of bad faith insurance practices:

  • Insurance company makes unreasonable delays in investigating a claim before agreeing to pay it
  • Insurance company fails to conduct a prompt and thorough investigation into the policyholder’s claim
  • Insurance company misrepresents the facts of the personal injury case
  • Insurance company commits a deceptive practice by not disclosing the existence of coverage, not disclosing the filing deadline, or not providing the necessary paperwork for timely filing
  • Insurance company deliberately misrepresents the law or policy language against the policyholder
  • Insurance company offers less money than the valid claim is worth, despite higher coverage called for under the policy
  • Insurance company withholds the benefits in an insurance policy without legal justification
  • Insurance company refuses to pay a valid claim that should be covered by the policy
  • Insurance company denies the claim, then fails to provide adequate justification for the denial
  • Insurance company compels the policyholder to pursue litigation in order to cover compensation available under the policy
  • Insurance company makes threatening statements to the policyholder or a third party making the claim

How Can The Personal Injury Lawyers At The King Firm Help?

When the insurance company is evaluating your personal injury claim, it is doing so in its own interests. Some insurers take bad faith measures to avoid paying valid claims that are rightfully owed to policyholders. Working with the Georgia personal injury attorneys at The King Firm ensures you have an advocate on your side. We have insurance company experience, and we know when a company is using bad faith insurance tactics. Contact us today at 229-396-5845 for a free consultation.

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