Policy Review 101: Ways to Spot Bad Faith in Your Business Insurance

An insurance company acting n bad faith breaches its fiduciary duty to the policyholder. It is, in effect, a breach of contract on the part of the insurer to accept payment for premiums and then not provide coverage per the terms of the established policy. Even as a business owner, you’re not immune to the detrimental effects a bad faith insurer can have on your finances, especially in the wake of a sudden catastrophe. Defeating the insurance company at its own game requires preparation, proof, and no shortage of legal assistance from experienced commercial litigation lawyers in Pennsylvania. The steps might seem simple, but it’s easy to overlook them.

Document the Damage Accurately

Pennsylvania business litigation lawyers

A simple photograph of the affected area in your business, home, or vehicle may not be sufficient evidence in a bad faith claim. Take as many pictures of the damage as possible from multiple angles. The more photographic evidence you have, the better case your legal team can make that the damage doesn’t stem from some preexisting defect in the property – a popular tactic with insurance companies when denying legitimate claims. For a more comprehensive view of the accident scene, take video footage if you have a recorder handy or a Smartphone with a video option.

Have Your Attorneys Comb through Your Policy

shady business tactics

Many business owners and individuals don’t understand the intricacies of the coverage they’ve purchased. Insurance companies tend to litter the documents with complicated legal language that make them impenetrable to anyone who hasn’t the bar exam. Attorneys with in-depth knowledge of contractual law can review your policy and identify policy exemptions that limit your coverage and exempt the insurance company from paying for your damages. For example, anti-concurrent clauses in a homeowner’s policy can exempt an insurance company from paying for wind damage if it occurs at the same time as a ‘non-covered’ event like flooding. These types of clauses in insurance policies touched off multiple bad faith lawsuits against insurers in the wake of Hurricane Katrina in 2005.

Watch for Signs of Bad Faith

commercial litigation attorneys PA

Are your phone calls to the adjuster going unanswered? If the communication between you and your insurance company has stopped regarding your open claim, there may be bad faith at work. Remember, the adjuster overseeing your claim isn’t your friend or your advocate in obtaining compensation for your covered losses. The adjuster is an employee of the insurance company, nothing more, and the overarching goal is simple – limit payouts. A lengthy delay in claims processing is a breach of contract in Pennsylvania as it violates state statute requiring fair and expedient resolution for legal claims. The insurer is placing its own financial interests ahead of your own as their policyholder, and that practice is illegal.

Don’t Sign Anything you Don’t Understand

understanding insurance policy language

 Never have a recorded conversation with an adjuster without an attorney present who’s working for you. The insurance company plays by a set of rules you haven’t read and won’t be privy to as you sift through the wrecked pieces of your home or place of business. You should also refrain from signing any documents until your legal team has had the opportunity to review the paperwork and determine if the insurer actually needs your signature on the documents requested. As a rule, if the language on documents appears complicated, the insurer intends for it to be so – hand it to your attorney.

Bad faith insurance damages the entire liability coverage system, weakens consumer confidence and puts no shortage of anxiety on policyholders. Spotting the warning signs of breaches in fiduciary duty may not stop the action outright, but it can provide powerful ammunition to pursue a bad faith claim against the insurer who would infringe on your rights. Call our firm today to get the answers to your important questions.