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How can you avoid being sued for bad faith insurance practices?

On Behalf of | Mar 27, 2020 | Trucking Accident Defense

As a insurance industry professional, you’ve likely been trained as to what a bad faith insurance claim is. Even still, many insurers employ various tactics that they think that their customers won’t readily identify as falling under the umbrella of “bad faith” when processing their claims. It can be helpful for you as an insurer to apprise yourself of what falls into this category of illicit activity so that you don’t expose yourself to any unnecessary legal liability.

A bad faith claim is best defined as a situation in which an insurer knowingly acts recklessly or unreasonably. If this results in a claim getting denied or the processing of it being delayed, then you as the insurer may be sued.

One common reason why insurance customers file lawsuits against insurers is because they feel like the company settles claims for less than they should. While you as insurer likely have to watch your bottom line, you can’t lowball a claimant just to keep your costs low.

Customers are more apt to sue you as an insurer if you take too long to process their claim. You only are given a certain amount of time to notify a claimant if you’re accepting or denying their insurance claim here in Kentucky. In most jurisdictions, this time frame may be as short as 15 to 60 days. If you fail to investigate a claim, advise the customer of upcoming deadlines or fail to follow up with a claimant on time, then you may be accused of engaging in bad faith tactics.

A third example of bad faith insurance tactics is if you as the insurer purposely misrepresent the language contained in an insured’s policy or the law. One of the reasons why you have to be licensed and undergo regular continuing education and training is to make sure that you remain up-to-date on all relevant laws and how to best interpret policy documents. You could be accused of bad faith insurance practices if you don’t do this.

There are many actions that you may take that could be easily construed as bad faith insurance practices. You may find it helpful to pass your handling of a claim first by an attorney here in Fayette before responding to it. This will reduce your chances of being sued for engaging in bad faith insurance practices in Kentucky.