No person wants to be involved in a car accident. The accident alone isn’t the only thing they don’t want to deal with. They also know they must interact with insurance companies, something most people try to avoid whenever possible.
Insurance agents and representatives can be difficult to work with. However, they are required to act in the policyholder’s best interests. If they fail to do so, they are acting in bad faith. The policyholder has the right to hold them accountable in this situation. What should a person do if an insurance company acted in bad faith?
Understanding Bad Faith Insurance
When an insurer tries to get out of paying a valid claim, this is referred to as bad faith. However, instances where an insurer refuses to investigate or process a legitimate claim within a reasonable time period also fall under this category. There are many ways an insurance company may use these tactics for its own benefit.
The insurance company may mispresent language within the policy documents so it doesn’t have to pay a claim. It may also fail to share policy exclusions and limitations at the time the policy is purchased or place unreasonable demands on a policyholder when the insured attempts to prove that a loss they sustained is covered. These are only a few of the methods an insurance company may use to avoid paying a valid claim.
Proving the Insurance Company Acted in Bad Faith
Insurance companies must establish a duty of good faith. They are required to pay legitimate claims within a reasonable period. If the insurer refuses to pay a claim, it must provide an explanation for doing so. However, this duty of good faith extends beyond the policyholder.
When the insured is being sued by another party, the insurer must settle the claim if it is valid. In addition, the insurer bears the responsibility of defending the policyholder if they are sued. When handling any claim, the insurer cannot require an excessive amount of paperwork to be completed. Doing so demonstrates they are trying to avoid the filing of the claim, which is not in good faith.
At times, there may be an ambiguity in the policy. When this happens, the insured may worry that legal authorities will fall on the side of the insurer. However, this is not the case. Courts look at ambiguities as being the fault of the insurance company, as it is the entity that drafted the policy.
Where to Look for Help
If a policyholder worries that their insurance provider is acting in bad faith, they may not know where to turn. Many people look to the state insurance authority. However, another option remains available to policyholders. They may wish to speak to an attorney to learn their rights and responsibilities in this situation. The attorney is an independent party working on behalf of their clients and will put a client’s best interests first.
Every insurance company must meet certain requirements if it wishes to remain in operation. State law often dictates what an insurance company can and cannot do when a policyholder files a claim or someone files a claim against them. Learn what is permitted to determine when an insurance company is acting in bad faith. A policyholder who is paying all premiums on time should get what they are paying for, and an attorney will ensure they do.
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The patterns insurers rely on, and where most claimants miss them
Most guides tell you bad faith means the insurer acted unreasonably. That’s true but useless on its own, because you need to know what unreasonable looks like on paper, in emails, and in the timing of decisions. I’ve watched enough claims (mine included, years ago after a rear-end collision) to know the tactics repeat themselves. Insurers rarely say “we’re stalling” or “we’re lowballing you.” They wrap it in procedure. That’s the whole trick.
Here’s a pattern I see constantly: the adjuster asks for the same documents twice, three weeks apart, then claims the file is “incomplete” when you follow up. On its own that looks like admin sloppiness. Stacked with three or four similar delays, it starts to look like a strategy to run out the clock on your patience, or on a statute of limitations. The mistake most people make is treating each incident in isolation instead of building a timeline. A single slow response isn’t bad faith. A pattern of slow responses, especially ones that always favour the insurer’s cash position, is worth documenting from claim number one.
Another mistake: assuming a lowball offer is automatically bad faith. It isn’t, by itself. Insurers are allowed to negotiate hard. What matters is whether the offer ignores clear evidence you’ve already given them, medical records, repair estimates, a police report that puts fault squarely on the other driver. If they’ve received that evidence and the offer doesn’t move, or moves by a token amount, that’s when you’re looking at something closer to an unfair claims practice rather than normal negotiation.
Watch for these specific red flags in your file:
- Requests for the same paperwork multiple times with no explanation of what’s missing
- Denial letters that cite a policy exclusion without pointing to the exact clause
- Offers that don’t change even after you submit new medical or repair evidence
- Adjusters who won’t put settlement reasoning in writing, only on phone calls
- Claims closed or reopened without notice to you
A real-world composite: a driver I know had a clear liability case, other driver ran a red light, police report backed it up. The insurer took six weeks to “assign an adjuster,” then asked for medical records already submitted twice, then offered 40% of the repair estimate citing “pre-existing damage” with no photo or report to back the claim. That combination, not any single step, is what a bad faith attorney would flag first. Keep every email, every call log with date and time, and every version of the offer in writing. Verbal promises disappear. Paper trails don’t.
More questions
Does a delayed payout always count as bad faith?
No. Delays happen for legitimate reasons, backlog, missing documents, ongoing investigation. It becomes a concern when the delay has no clear cause, repeats after you’ve supplied everything asked, or coincides with a dead
Related reading: How Insurance Adjusters Take Advantage of Accident Victims in Florida and Why extended auto insurance is good for a Toyota.
