What To Do If Your Homeowner's Insurance Carrier Won't Pay

Homeowner’s insurance is designed to protect you in the event of unexpected damage to your property or loss due to covered events like fire, storm damage, or theft. However, when your insurer denies or delays your claim without reasonable cause, you may be facing what’s known as insurance bad faith.

Bad faith insurance practices occur when an insurance company fails to honor its obligations to policyholders or acts unfairly in processing claims. If you believe your insurance company is acting in bad faith, it’s important to understand your rights and options.

This blog post will explain what constitutes insurance bad faith, how to recognize it, and what you can do if you find yourself in this unfortunate situation.

What is Insurance Bad Faith?:

Insurance bad faith refers to situations where an insurance company unfairly refuses to pay a legitimate claim, delays the claims process unreasonably, or otherwise fails to fulfill its obligations under your homeowner’s insurance policy. Insurance companies are legally required to act in good faith and deal fairly with policyholders. When they fail to do so, they may be liable for bad faith.

Examples of bad faith practices by homeowner’s insurers may include:

• Unjustifiably denying a claim;

• Delaying payment;

• Failure to investigate;

• Lowballing;

• Misrepresenting policy terms; and

• Failing to provide a written explanation for a decision.

  
  

Insurance companies are obligated to handle claims in a manner that is prompt, fair, and reasonable. When they fail to do this, policyholders have legal recourse under bad faith laws.

How Do You Know If You’re a Victim of Bad Faith Insurance?:

Not all claims that are denied or delayed involve bad faith. Sometimes, an insurance company may deny a claim because it believes the damage falls outside the scope of coverage. However, bad faith arises when the insurer is deliberately acting unfairly or unreasonably.

Here are some signs that you may be dealing with bad faith insurance practices:

1. Denial Without a Legitimate Reason:

If your claim is denied and you can’t get a clear explanation from your insurer or the reason for the denial seems unreasonable, it could be a sign of bad faith. Your insurer is required to explain why your claim was denied and to provide evidence supporting that decision.

2. Unexplained Delays:

While insurance claims can take time to process, unreasonable delays - especially after you’ve provided all the necessary information - may indicate bad faith. If the insurer repeatedly asks for the same documentation or provides no updates on the status of your claim, it could be an attempt to avoid paying out.

3. Lowball Settlement Offers:

If the insurer offers a settlement that is significantly lower than the actual value of your loss or damage, this could be a sign of bad faith. Insurance companies are supposed to offer a fair and reasonable settlement based on the coverage in your policy, not a minimal amount designed to reduce their financial liability.

4. Failure to Investigate the Claim:

If your insurer fails to conduct a proper investigation into the claim or disregards key evidence, they may be acting in bad faith. A legitimate claim requires a thorough review of the circumstances surrounding the loss.

5. Misrepresentation of Your Policy:

If your insurance company provides inaccurate information about your policy or coverage limits - whether through misstatements or omissions - this could constitute bad faith. They are required to be clear about the terms and conditions of your coverage.

What Can You Do If You Are a Victim of Bad Faith Insurance?

If you believe your insurance company is acting in bad faith, there are several steps you can take:

1. Review Your Insurance Policy:

Before taking further action, carefully review the terms and conditions of your homeowner’s insurance policy. Understand what your coverage includes and compare it with the reasons given for denying or delaying your claim. This will help you determine if the insurer’s actions are unjustified.

2. Document Everything:

Keep a record of all correspondence with your insurer, including emails, letters, phone calls, and any other relevant communication. Documentation is key in any legal dispute, and it will serve as important evidence if you need to pursue a bad faith claim.

3. Contact the Insurance Company Again:

Sometimes issues can arise from simple misunderstandings. It may be worth reaching out to your insurance company again to request clarification on the denial or delay. Make sure to keep a record of your communications, and follow up regularly to ensure your claim is being processed.

4. File a Complaint with the State Insurance Department:

If you believe your insurer is engaging in bad faith, you can file a complaint with your state’s Department of Insurance. State insurance regulators oversee the practices of insurance companies and can investigate allegations of bad faith.

5. Consult with an Attorney:

If your attempts to resolve the issue with your insurance company have failed, or if the insurer is clearly acting in bad faith, it’s time to consult with an experienced attorney. A lawyer who specializes in insurance claims and bad faith cases can help you understand your rights, negotiate with the insurer on your behalf, and pursue legal action if necessary.

Conclusion:

Dealing with an insurance claim denial or delay can be frustrating, but when an insurance company acts in bad faith, it can make the situation even worse. Don’t hesitate to contact our office if you think you're the victim of insurance bad faith. Garber Law is one of the few law firms in New Jersey who specialize in handling insurance bad faith cases. Schedule your free consultation and let us fight for you.