Tactics Insurance Companies Use to Avoid Paying Claims

Car Accidents,Features | January 25, 2021

You pay every month to maintain car insurance. It may come as a surprise, therefore, when your insurer does everything it can to avoid paying you for a claim. Unfortunately, insurance companies protect their profitability by minimizing how much they pay claimants. You may encounter one or more of the following tactics from an insurance company that wants to avoid paying you.

Common Bad Faith Insurance Tactics: Delay, Denial, Underpayment

Wrongful Claim Denial

When an insurance company does not treat you or your claim with the fairness and integrity required by law, it is insurance bad faith. California Insurance Code Section 790.03 lists many examples of deceptive practices committed by insurance companies that constitute bad faith. One is wrongful claim denial.

A wrongful claim denial can describe one of two things: the insurance company denying your claim for an invalid reason or denying your claim without providing a reasonable explanation. If an insurance company denies your auto accident claim, it must send you a written explanation. The explanation should cite the exact provision in your insurance policy that gives the company the right to deny your claim.

If you receive a notice that an insurance company is denying your claim, but the company fails to give you a reason, this is a wrongful claim denial. It is also wrongful if the reason does not make sense. Carefully review the language of your insurance policy to determine the validity of the denial. If you believe the insurer does not have the right to deny your claim, consult with an attorney about insurance bad faith.

Unreasonable Delay in Payment

Delayed payouts are another common form of insurance bad faith. Under California law, an insurance company has 40 days from receiving a claim and required documentation to approve or deny benefits. Upon reaching a settlement, the insurance company has an additional 30 days to make a payment.

An insurance company may unreasonably delay its investigation or payout of a claim for two reasons. One is to save the money it must spend on your claim for as long as possible. Another is to try to delay making a decision on your case until your statute of limitations to file a lawsuit runs out.

In California, the statute of limitations on a car accident claim is two years from the date of the crash. Once this time limit runs out, you will lose the chance to file a lawsuit against the at-fault party forever. This is why it is important to speak to an attorney as soon as possible after an insurance company tells you it needs more time to investigate.

Underpayment of Claims

The third most common tactic insurance companies use to save money is the underpayment of a claim. An insurance company may devalue your claim to profit its investors. Be wary of the first settlement offer you receive from a car insurance provider, as initial offers are often lower than the true values of claims. Take the offer to a lawyer to find out whether or not it is fair according to the extent of your injuries and losses. If an insurance company is guilty of underpayment of a claim, your lawyer can negotiate for a higher offer for you.

Consult a Los Angeles Car Accident Lawyer

If an insurance company treats you unfairly to avoid spending money on your claim, you have the right to file an insurance bad-faith claim. This civil claim demands financial compensation for the insurer’s wrongdoing. A successful bad-faith claim could lead to compensation not only for your original complaint, but an additional amount to penalize the insurer.

If you believe you are the victim of insurance bad faith, contact a Los Angeles car accident lawyer for assistance. A lawyer can explain bad faith to you, as well as help you file a lawsuit in LA County.

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