What Are the Top Misconceptions About Bad Faith Insurance?

What Are the Top Misconceptions About Bad Faith Insurance?

When filing an insurance claim, you should familiarize yourself with how these companies operate. Specifically, it is important to understand what a normal course of business for insurance companies looks like, and what actions constitute bad faith.

Bad faith occurs when an insurance company fails to fulfill its obligations to its policyholders in a manner that aligns with the terms of the policy and with a reasonable level of fairness and honesty. However, these acts are often misunderstood. Below are some of the most common misconceptions about bad faith insurance and how they can affect your options for legal action. Remember that an experienced Kansas City insurance bad-faith attorney can help you navigate these complex claims.

#1: Insurance Companies Always Act in Your Best Interests

Many people believe that insurance companies always act in the best interests of their policyholders. While insurers are obligated to honor the terms of their policies, they often aim to minimize losses and maximize profits. This financial motive can sometimes lead to bad faith practices, such as undervaluing claims, delaying payments, or denying claims without a valid reason.

#2: Only Large Insurance Companies Act in Bad Faith

Another myth is that only large insurance companies engage in bad faith practices. In reality, any insurance company, regardless of size, can act in bad faith. The size of the company does not determine the integrity of its practices; small and medium-sized insurers are also capable of mishandling claims or engaging in unfair practices toward policyholders.

#3: Bad Faith Always Involves Malicious Actions

Bad faith does not necessarily involve malicious intent. The key issue in these cases is the insurer’s failure to act fairly and honor the policy’s terms, whether intentionally or due to oversight. An insurance company can act in bad faith through negligence, such as failing to conduct a thorough investigation of a claim or not communicating adequately with the claimant.

#4: Claimants Can’t Do Anything About Bad Faith

Many people believe they are powerless against insurance companies and cannot do anything about bad faith practices. However, this is far from the truth. Policyholders have legal rights and can take action against insurers that act in bad faith. This may involve filing a complaint with a government oversight agency or filing a civil lawsuit to seek compensation for damages caused by the insurer’s unfair practices.

#5: Bad Faith Claims Aren’t Worth Your Time and Effort

You may think that pursuing a bad faith claim isn’t worth the time and effort that a lawsuit involves. However, holding insurers accountable not only can lead to compensation for you but also helps ensure fair treatment for others. In many cases, the prospect of bad faith litigation can motivate an insurer to settle a claim more equitably, providing you with the full and fair compensation that you deserve.

#6: You Don’t Need an Attorney for a Bad Faith Claim

Navigating a bad faith claim without legal expertise can be challenging. In these situations, an attorney with experience in these claims can provide valuable guidance, helping to evaluate the claim, gather evidence of bad faith practices, and advocate on your behalf. Legal representation may also increase the likelihood of a favorable outcome.

If you are facing potential bad faith practices, a Kansas City personal injury attorney can help. A bad faith insurance lawyer can help you take the necessary steps to secure fair compensation. As soon as possible following the incident, schedule a free legal consultation to explore your options for justice.