What to do if a disability insurer may be acting in bad faith

This article provides a brief overview of what behaviors count as bad faith when a disability claim is denied.

Every insurance policy is a contract between the insured and the company providing insurance. As such, insurers have a legal obligation to act in good faith when investigating and paying out on claims. Unfortunately, not all insurance companies do act in good faith. Legitimate claims may be denied or insurers may cause unreasonable delays that can put undue stress on claimants. For people who have had their disability claims denied, possibly because their insurer is acting in bad faith, the resulting stress and uncertainty can be excruciating. Below is a brief overview of some common bad faith behaviors as they pertain to disability insurers.

What counts as bad faith?

There are multiple different ways that an insurer may be acting in bad faith. As FindLaw notes, a common case of bad faith behavior is when an insurer denies a disability claim without giving a reasonable explanation for doing so. Bad faith, however, is not limited to claim denials alone. An insurer may, for example, delay its investigation into a disability claim without providing a reason for the delay. As Lawyers and Settlements points out, other bad faith conduct may include when an insurer tries to downplay or misclassify a claimant's medical condition, conceals benefits from claimants, delays payment of or only partially pays out on a successful claim, dismisses a claimant's legitimate medical evidence, or insists that the claimant is able to work in another field of employment.

Why act in bad faith?

While insurance companies are legally and ethically obligated to act in good faith, it can sometimes be in their self-interest not to do so. Insurers are, after all, private companies that want to make a profit and any time they pay out on a claim they are essentially losing money. In some cases, insurers will use some of the tactics described above not just to deny a claim unreasonably, but to keep delaying investigating or paying out on one. These delay tactics are often designed to pressure a claimant into either giving up on a claim or settling for less than he or she may actually be due.

What to do?

Anybody who believes their disability claim was denied or is being delayed in bad faith should know that they have options available to them. An attorney who is experienced in helping claimants deal with bad faith insurers can be of invaluable assistance. Insurance companies can be intimidating for claimants to deal with on their own. Furthermore, claimants may not be aware of whether certain actions or behaviors their insurers have taken count as bad faith. An experienced attorney can help claimants understand their rights and may be able to help them recover whatever money they may be owed by their insurer.