Allegations of bad faith plague insurance agencies throughout the country. While some claims are valid, other complaints are often found to be lacking merit. However, the damage is permanent to a company’s reputation, not to mention its financial bottom lines.
Proactive steps to reduce exposure can take many forms and could mean the difference between a successful and unsuccessful bad-faith defense.
Putting protections in place
Adjusters confirming coverage is an essential first step, starting with securing the necessary evidence via investigations that the policyholder does have a policy. Sidestepping bad faith claims will likely require further actions required by case law. Verifying that information is essential to confirm coverage and can help to avoid bad faith accusations through the following steps:
- Securing a copy of the policy
- Assembling forms and endorsements to identify what the policyholder actually received
- Reviewing the coverage with attention to all details
- Determining the court’s likelihood of ruling that coverage exists
In the end, contractual language in the policy must clearly state all liability coverage excluded for the insurance policyholders.
Simply put, language in the insurance policy must clearly state all aspects of liability coverage, specifically the exclusions noted in the document. An all-too-brief review of the policy would have shown this clearly.
Prevention is the best strategy to ensure a healthy bottom line and a positive image for new and existing customers. Equally as important is legal help from knowledgeable lawyers and experts at their disposal who can navigate through the complexities inherent in a bad faith insurance claim.