The insurance industry has a reputation for often denying legitimate claims. Bad faith tactics are the norm for unethical insurers that prey on vulnerable people who have recently lost a home in a tornado, a loved one, or were seriously injured.
Of course, insurance companies can have credible business reasons to deny or reject claims. Yet, at the same time, they can also use unreasonable delays to manipulate people into thinking they submitted a bad claim.
Unexplained delays might include changing your representative, requesting unnecessary records or documents, stalling the investigation process, or avoiding communication with you.
There is often a method behind these tactics, as insurance companies want oblivious policyholders to exceed the statute of limitations on their claims. Once that date has passed, the insurance company is immune to legal action and the company can retain its profits. If you have accrued significant expenses because of a bad faith claim denial, you could possibly sue an insurance company for the delay.
Why Do Insurance Companies Delay Payouts?
Many insurance companies have honest reasons for delaying a payout. Policyholders might submit inaccurate paperwork, forget to pay their premiums, or simple clerical errors could be to blame.
Ethical reasons claims don’t get paid can include:
- Fraudulent application
- Additional information is required
- Coding errors
- Non-covered services or events
- Unpaid premiums
- Failure to file on time
- Insufficient documentation
It is important to remember that insurance companies are for-profit businesses, and they want to mitigate their losses. Some companies even make it part of their policy to deny all claims to ensure legitimate payouts.
Insurance Company Delay Tactics
Over time, insurance companies have identified many creative ways to stall payouts and confuse policyholders in the process. They always hope people will get frustrated and tired enough to settle for a lesser payout or quit.
There are signs your insurance company might be stalling. Be on the lookout for insurance companies that might be:
- Using different roadblocks to lengthen the process, from communication issues to mystifying requests to internal changes that require you to start over.
- Rejecting your claim immediately without cause, as part of a company-wide practice to avoid payouts.
- Using excuses, such as saying the evidence supporting your claim was destroyed.
- Asking for unrelated records or information, or agents requesting information in stages to drag out the process.
- Sharing updates on your claim that are non-conclusive.
- Switching insurance adjusters on your claim frequently.
- Making communication difficult through sporadic messaging. Agents might also dodge emails, phone calls, or other contact attempts.
Unethical insurance practices are everywhere; you just have to look close enough. Thankfully, insurance dispute attorneys are well-versed in bad faith insurance claim practices and identifying the red flags that could cause you financial pain.
What Should I Do if My Insurance Company Takes Too Long?
Claims can get put on hold all of the time, but you want to take action against deceptive insurers holding up an eligible one. These practices could cost you money from your pocket. Intentionally holding up a legitimate claim is reason enough to take legal action against an insurer.
In this case, you can:
- Check your insurance policy and company documents to determine when your insurer must respond to the claim: An insurance dispute attorney can handle the due diligence process and gather appropriate evidence against the insurer to build a case.
- Check your state law to understand if there are rules mandating a time frame for response by an insurer: State laws differ regarding filing requirements. It is important to contact an insurance dispute lawyer as soon as possible.
- Collect all documents and evidence associated with the claim and store them safely: Protect yourself and preserve evidence so the insurance company cannot “accidentally” destroy information that supports your claim.
- Keep detailed notes of conversations and ensure there is a paper trail: This goes hand-in-hand with preserving evidence. Maintain thorough notes with the insurer, rejection or denial letters, email records, and any written communication.
- Contact a qualified insurance dispute attorney in the case of wrongfully delayed insurance claims: Consider retaining an experienced attorney with a proven track record of successful insurance dispute cases and knowledge of the laws.
Sometimes insurance companies take too long because they do not have additional records from you, they believe the claim is fraudulent, or there are clerical errors. In other cases, they deny your claim because they want to keep the money. When that happens, it is in your best financial interest to take legal action.
Can I Sue My Insurance Company for a Delay in Payouts?
Policyholders often hire an experienced insurance dispute attorney if the suspected payout is significant and they are on the hook for substantial bills that should be covered under their legitimate insurance policy. Taking legal action is often the only chance policyholders have for recourse, especially if they have already tried everything in their power and failed to get payment.
Sadly, sometimes policyholders need an immediate response regarding their claims. These claims could be for funeral expenses after the death of a loved one or a devastating natural disaster wiped away their home and personal belongings. Unreasonable delays can cause significant harm, especially in delicate situations.
How Long Can an Insurance Company Delay a Claim?
Generally speaking, states require insurers to respond to a claim within a specific time period. For example, Wisconsin mandates that insurers have 30 days to approve or deny a claim and issue payment if necessary.
Suppose insurers fail to act reasonably within a certain period to settle a claim. In that case, they might be considered acting in bad faith. Policyholders can take legal action and possibly pursue monetary damages.
Am I Eligible for Compensation for My Insurance Company’s Delay?
Insurance companies have an ethical duty to uphold their obligations, including processing legitimate claims. Otherwise, actions like unreasonable delays, unlawful rejections, and other practices might be considered a breach of contract. Policyholders might be responsible for thousands of dollars when the insurance company refuses to pay their claim. Or worse yet, they might be stuck with a partial settlement that does not meet their financial needs.
There are three ways to cover potential damages from a bad faith insurer, including economic, contractual, and punitive damages. For instance, contractual damages represent the amount of the denied claim plus any interest. Monetary damages include financial losses sustained because of an insurer’s bad faith. Lastly, punitive damages are an attempt to collect additional money if there is proof of intentional negligence.
Sadly, policyholders rarely challenge denied insurance claims as it is easy to believe the insurer when they deliver “proof” of denials or rejections. However, when your money is on the line, it is important to fight back with help from a bad faith insurance attorney.
Contact an Insurance Claim Dispute Lawyer For Help
Sometimes policyholders have no choice but to sue their insurance company for bad faith claims practices. The right insurance dispute lawyer can make all the difference toward receiving a payout from an insurer after weeks and months of claim rejections and frustration.
An experienced insurance dispute attorney can gather evidence against the insurer. With this evidence, you can have a fighting chance to win maximum compensation for your losses. Beyond that, lawyers help people review relevant documents, investigate the reasons behind the delay, negotiate with the insurer, and also professionally represent policyholders in an insurance dispute lawsuit.
Policyholders can take a stand against bad faith insurance companies and fight unreasonable claim delays that hurt real people with families and financial needs.