Bad faith issues can lead to financial losses for policyholders, and state laws prevent these insurers from practicing unethically. When the customer takes out the policy and accepts the coverage, the asset identified in the policy is covered according to the terms of the insurance policy. By reviewing 6 common bad faith issues in commercial insurance, policyholders learn when to seek legal representation.
1. Misrepresentation of the Policy and Its Benefits
Insurers cannot misrepresent any terms or benefits defined in the insurance policy. By lying to customers, the insurers can secure more sales, but in the end, the customer doesn’t get the coverage they were promised when the benefits are needed.
According to the law, the insurer must explain all terms of the policy and discuss how the benefits work and what the customer needs to do when filing an insurance claim. Policyholders who were misled by an insurer can look here for a commercial insurance attorney right now.
2. Denial of Policy Benefits and Refusal to Pay Valid Claims
When a customer files a claim through their insurer, they are entitled to all the benefits outlined in the policy. For example, if a business owner purchases collision and comprehensive auto insurance for commercial vehicles, they are entitled to auto repairs for their automobile if they are involved in an accident and sustain damage.
The same policy may provide coverage for a rental car and medical expenses for auto accident injuries. When filing a claim, the auto insurance provider will assess the accident, but they are required to release the funds to the policyholder based on the policy value. If they don’t, the business has a viable case against the insurer.
3. Threats to Appeal an Arbitration Award
An insurer cannot threaten the policyholder in any way legally. If the company owner or a third party was awarded monetary benefits through their policy, the insurer cannot for any reason threaten to take back the funds for any reason. Even if the policyholder ends their coverage a year later, the insurer cannot use these tactics or reclaim the insurance benefits to retaliate.
4. Making Attempts to Underinsure and Refusal to Resolve Issues Appropriately
The insurers cannot low-ball a claim for financial gains. All policies present a specific valuation for the asset it covers. The insurance company cannot refuse to resolve issues that are delaying the payment when the customer is entitled to the benefits for any reason.
5. Delays in Investigation an Insurance Claim
All insurers have to investigate every insurance claim filed through their company in a timely manner. The insurer cannot wait a year to process a claim to avoid a payout. As soon as the claim is filed, the insurer must assign an adjuster who must do their due diligence to manage the claim as outlined in the policy.
6. Deceptive Insurance Practices Or Failing to Disclose All Details
Deceptive insurance practices and failing to disclose all details of the policy are illegal. Insurance providers who do not disclose restrictions or limitations for a policy before the customer accepts the policy could be liable if they refuse to cover an insured asset.
Commercial insurance must provide coverage as outlined in the policy. If a business suffers a loss due to a covered event, the policy offers coverage to replace the asset. If the asset was a commercial property, the insurance pays out the full value of the policy. An insurer who refuses to pay according to the terms of the policy is unethical and unlawful. By contacting an attorney, business owners learn what to do next.