Black plate with inscription "Bad Faith Insurance"

Understanding Insurance Bad Faith Tactics

Law Office of Steven R. Smith March 1, 2024

Bad insurance claims are situations where your insurer doesn't play fair. In New York, it's when they act in bad faith by denying or undervaluing a valid claim that you've made. This could involve the insurer using unfair or deceptive practices, such as delaying the processing of your claim, offering you an unreasonably low settlement, or wrongfully denying your coverage without a proper reason. This can happen in any type of insurance, be it auto, homeowner's, life, or health insurance. It's not just about intentional wrongdoing, but also negligence or incompetence from your insurance company. 

If you're on the receiving end of these bad insurance practices, it can have serious consequences for you. It may result in financial losses, as you might not receive the full compensation you're entitled to under your policy. On top of that, it can cause unnecessary stress and frustration, as you may find yourself having to fight for your rights and spending valuable time and resources to resolve the issue. 

Common Bad Faith Tactics

As an insured individual in New York, you have certain rights when dealing with your insurance company. These include the right to fair treatment, prompt handling of your claim, and honest communication from your insurer. Some of these tactics include: 

  • Lowball First Offer. Often, an insurer's first offer is a lowball figure, hoping that you'll accept it without knowing your accumulative expenses. They are betting on your desperation to settle quickly. However, accepting this initial offer can leave you short-changed, unable to cover your medical bills and lost wages, especially if you haven't reached your Maximum Medical Improvement (MMI). 

  • Long Delays. Another common tactic is long delays in processing claims. The insurance company may fail to respond to communications, leaving you in uncertainty and financial stress. However, New York law has a timeline in which an insurance company must respond, failing to do so can be seen as acting in bad faith.  

  • Failing to Conduct a Thorough Investigation. Insurance companies have an obligation to thoroughly investigate all claims. If they fail to do so, or if they use the concept of comparative negligence to reduce your compensation without proper justification, it's a sign of bad faith. 

  • Misrepresentation. One of the most egregious forms of bad faith is misrepresentation. This could involve misrepresenting the policy's coverage or even aspects of the law itself. You should be aware of New York’s Unfair Claims Practices Act, which provides protections against such tactics.  

In light of these underhanded strategies, policyholders must remain vigilant. Understanding your policy, rights, and the law is essential in navigating the complex world of insurance claims. If you encounter such bad faith tactics, consider seeking legal advice to protect your interests. 

What to Do If You Suspect Bad Faith

If you suspect your insurance company is using bad faith practices, you can file a complaint with the New York State Department of Financial Services (DFS). You also have the right to take them to court if necessary. Make sure you review your insurance policy carefully, understand your rights, and consult with a personal injury attorney to protect your interests. 

Can I Sue My Insurance Company for a Bad Faith Tactic in New York?

Yes, you have the right to sue your insurance company for engaging in bad-faith tactics in New York. While New York does not have a traditional bad faith law, the courts have shown willingness to award punitive damages in extreme cases of insurer misconduct. If you believe your insurer has unreasonably denied your claim, delayed processing it without valid reasons, or acted dishonestly in handling your claim, you can file a lawsuit seeking compensation for the damages caused by their bad faith practices. Therefore, don't hesitate to consult with a legal professional if you believe you're a victim of insurance bad faith. 

What Is Your Attorney’s Role in Settlement?

Your attorney plays a pivotal role in the settlement process, providing representation that can be critical in successfully resolving your bad-faith insurance claim. Firstly, they will review your policy in detail to assess the validity of your claim and the extent of the insurer's misconduct. 

Also, attorneys are skilled negotiators who can effectively communicate with insurance companies to prevent lowball offers and ensure that settlement proposals genuinely reflect the value of your claim. They prepare and organize necessary documentation and evidence to build a strong case, argue for a fair settlement, and challenge any attempts by the insurer to undervalue your claim. 

From filing complaints with the appropriate agencies to representing you in court if litigation becomes necessary, they aim to protect your rights and seek to recover not just the financial loss but also compensation for any additional damages caused by the insurer's bad faith tactics. 

Remember, dealing with insurance companies can be difficult, but you don't have to do it alone. With the Law Office of Steven R. Smith on your side, you can navigate these challenges with confidence.