It’s considered unethical for insurance companies to dig for discrepancies to deny a claim. But it does happen, and insurance companies can find loopholes to side the claim in their favor. When this happens, we call it “bad faith”.
Because of the nature of a relationship with an insurance company, courts have ruled that they owe their customers “good faith”. This duty arises from the relationship between a disabled person and insurer, not from any wording in a contract. Bad faith can result from the way a claim is handled by an insurance company, the way a decision is made regarding the claim, or something as simple as a lack of proper communication between the two parties.
If an insurance company doesn’t perform its duties in good faith, the insured person is able to seek damages beyond what is normally provided by the policy (typically in the form of punitive damages). Not only are these damages used to compensate an insured person for a loss, but they’re also designed for punishing any bad behavior by the defendant.
Here are some red flags to look out for if you’re submitting your long-term disability claim with an insurance company:
- They ignore substantial medical evidence.
- They lack empathy and seem to disregard any financial or emotional stress you’ve had to endure.
- Your benefits have been terminated, and you never received an update from the doctor appointed by the insurer.
- They make low settlement offers and/or start charging unwarranted fees.
- They deny benefits for an unreasonable amount of time.
- They are actively denying, stalling, or lengthening the settlement in hopes that the pressure will lead you to accept the offer they’ve made.
What are the consequences of bad faith behavior?
If an insurance company doesn’t live up to its duties under the long-term disability policy, you may sue the insurance company for breaching the contract, and be able to recover damages to compensate them for the insurance company’s breaches. Typically these damages encompass any wrongfully-withheld benefits owing under the policy, interest, and legal costs. There may be additional damage costs if the breach has led to other foreseeable losses for the insured person. In many cases, the insurance company is ordered to resume paying the insured person benefits and back on claim.
If you believe your insurance company is acting in bad faith, here are your next steps:
- Contact a long-term disability lawyer (like us!) for assistance.
- File a complaint with your state insurance commissioner (make sure you speak with your attorney first on how to proceed).
- Keep all your medical records and documentation organized and readily available.
If you’re going through a bad-faith lawsuit and need additional assistance in filing your claim or want to take action against your insurance company, Disability Associates can help! We know that filing for Social Security benefits can be a long and frustrating process. We are dedicated to taking the weight off of our client’s shoulders by simplifying this process for them. There is absolutely no charge unless we win your case. Contact us today!