Getting into a car accident can be scary, and the days following are often stressful, as you typically need to follow a lengthy checklist to file a car insurance claim. The least your car insurance company can do for you is uphold their side of the bargain, right?
That’s not always the case. Many car insurance companies will do whatever they can to avoid paying a cliam, which is known as abad faith practice. Luckily for you, you have a car insurance company that can help protect you from these bad faith practices (no strings attached, we promise).
Bad faith practices, defined
When you sign up for car insurance, you’re entering an agreement with your insurer to cover you financially if certain events occur, like if you get in an accident that wasn’t your fault.
The fewer claims insurers pay out, the more money they make. You may see where this is going—some insurers may turn to dishonest tactics to avoid paying out claims, AKA acting in bad faith.
An insurance company acts in bad faith when they try to avoid responsibility and don’t keep their end of the bargain. This can mean denying legit claims, delaying payment on a claim, undervaluing the cost of repairs, or refusing to renew their policyholder's coverage.
Bad faith practices in car insurance are more than just human error or a simple mistake—it’s a type of deception that takes advantage of you as a customer.
Bad faith insurance practices don’t just cost you more money. They can also delay you getting the necessary treatments or medications you may need after an accident.
Examples of how car insurance companies commit bad Faith practices
Your insurer has a duty to negotiate any claims and settle them in good faith. An example of an insurer acting in bad faith would be:
Denying a claim without a reason
Typically, when you file a claim, your insurer will ask you for documentation to support your claim. They may ask for more information or documents before deciding whether to pay out the claim or not.
Insurers are allowed to deny your claim—but not without a reason.
Some insurers will delay giving you a reason for the denial with the hopes you’ll go away. Others will refuse to pay a valid claim, even if you provide all the information they’re asking for.
Mishandling a claim
Insurance companies may make unreasonable asks or demands for certain documents, or fail to complete a thorough investigation of a claim before denying it or paying it out.
For example, your insurer could recognize you got into a car accident but fail to fully investigate the extent of the damages.
Insurers may also delay making a decision on your claim or paying out your claim, in the hopes you’ll forget about them or cancel the claim. This can be especially awful with medical claims, as you typically can’t afford waiting for your insurance company to get back to you before seeking treatment.
Once they’ve processed a claim, insurers may turn around and offer you less money on the cost of repairs or the total amount a claim is worth.
Many people think they have to accept the first offer their insurer brings to them, but this isn’t true. You can often negotiate a higher settlement if you think you’ve been lowballed and deserve more money.
Misrepresenting policy details
Some insurers will market affordable or low-price policies that actually have hidden fees or provide less coverage than drivers should have. Other insurers may pressure you into buying more coverage than you need or can afford.
Insurers may outright lie about facts and provisions in your policy, or change your application without you knowing. This doesn’t happen often but, it is something to be aware of.
When is it the right time for an attorney to step in?
Acting in bad faith is illegal, and there are laws to protect you if you think your insurer isn’t doing the right thing.
If you think your car insurance company acted in bad faith, you may be able to file a complaint with your state's insurance department. Include all relevant information such as the details of the claim and why you believe it was unfairly denied or lowballed.
You also can file a lawsuit against your car insurance company.
This is where it’s advised that you hire a lawyer. Car accident lawyers help you make sense of the complex laws around bad faith practices and help you file a bad faith insurance claim, also known as an unfair claim. If a court finds that your insurer acted in bad faith and committed any unfair claims practices, you may be entitled to damages for any additional expenses or harm, including attorney and legal fees.
You can technically handle an unfair claim yourself, but you may run into some issues and it may take extra time to collect the right documentation and receipts.
Remember that insurance companies have certain responsibilities towards their policyholders, so it’s important to read the fine print of any car insurance policy before signing (and check out our blog to understand the jargon).
Why we care
Insurers will base how much to charge you for insurance on certain factors. Most will rate you higher if you live in an expensive neighborhood, if you own a home or multiple cars, and your credit score—all factors that heavily favor white, affluent families.
Individuals that are unbanked, lower-income, or come from marginalized communities have a much harder time getting affordable car insurance, based on circumstances that don’t reflect who they are as drivers. For example, someone who files a number of claims for car damages is penalized whereas someone who can pay to fix the damages themselves isn’t.
If this all seems suspicious, it’s because the car insurance industry is broken.
Insurers use deceptive tactics that take advantage of certain facts you may not know about. We’re working to change that.
We believe car insurance should be unbiased and affordable. We offer transparent, data-driven pricing based on how you drive and where you live, not based on irrelevant factors credit score or income.
We put you first—making sure you understand your policy and working with you to file a claim or solve an issue. Because in a stressful situation like a car accident, you deserve to be met with compassion.