Your homeowner’s insurance policy protects you in multiple ways. It can cover the costs a visiting neighbor suffers if they break their leg on your front stairs, shielding you from financial liability. It can protect you from crime by reimbursing you for property loss. Homeowner’s insurance policies can even protect you from unpredictable and unusual scenarios, like major storm damage.
Most homeowners carry enough insurance to rebuild their houses after a total loss and protect the property inside their homes. Unfortunately, when they go to make a claim against that coverage, they may discover that the insurance company does not want to fulfill their obligations despite receiving premium payments every year for the coverage.
When an insurance company does not fulfill its legal or contractual obligations to a policyholder, it may have committed a bad faith insurance infraction. If you know the most common forms of bad faith insurance practices, you will be less likely to fall victim to insurance company misconduct.
Changing the terms of the policy
When you pay your premium for the year, you obtain specific amounts of coverage that you negotiate with an agent. There may be a deductible that applies before the company will pay for your losses, and they may limit or deny coverage for certain issues based on terms of your coverage.
Insurance companies can change the terms of the policy or what they charge for coverage, but they cannot do so retroactively. Such changes should only occur when you renew your policy or move to a new company.
They deny valid claims
You pay for coverage to protect your home from storm damage, but then when you need to repair your roof, the insurance company says that they won’t pay for the work that your home requires. When insurance providers deny claims that clearly should have coverage, the denial may be an act of bad faith insurance.
They delay or inappropriately limit payment
Receiving insurance checks in a timely manner can be crucial for those recovering from a criminal act or recent damage to their home. Some insurance companies will repeatedly delay making payments even after they approve a claim, possibly in the hope that the policyholder will forget or will grow tired of following up on the claim. Offering a very low settlement or paying a policyholder far less than what the policy should cover could also be bad faith insurance.
Those denied coverage as promised in their policy document may have grounds to take legal action against the insurance company to get the coverage they deserve and possibly additional compensation because of the company’s misconduct. Learning more about your rights as someone who needs to file a homeowner’s insurance claim will reduce the risk of falling victim to manipulation by your insurance provider.