Definition: an insurer is supposed to act in good faith when investigating your claim. By acting in bad faith, that insurer may deny your claim for illegitimate or spurious reasons. Bad faith is not the same as negligence or simply making an honest mistake; rather, it happens when the insurer intentionally takes actions or fails to take actions so as to avoid paying out on a claim
Fact: Most claims do not have a bad faith claim component and you would be better off filing an application or claim declaring benefits if your Insurer stops paying.
However bad faith does happen and although the amounts awarded are not typically large it may be worth pursuing-legal advice recommended.
Examples: An insurer may be acting in bad faith if the insurer delays, discounts or denies payment without a reasonable basis for its delay, discounting or denial.
Failure of insurer to acknowledge and reply promptly upon notification of a covered claim.
Failure of insurer to affirm or deny coverage of claims within a reasonable time upon receipt of claim
Failure of insurer to promptly provide reasonable explanation and basis when denying or making a compromise offer of claim
Using harassing, intrusive or demeaning investigative methods and procedures which victimize the insured. (think of rehab)
Utilization and/or development of deceptive insurer schemes or use of outside company services set up or conducted to carry out the same false pretense schemes (i.e. “Independent Medical Examiner Paper Reviews”) for the purpose to be able to wrongfully deny or reduce payment of claims.
Insurer advice to claimant not to hire a lawyer.
Using inaccurate or wrongful information of a factual or legal nature to diminish, deny or delay payment of a claim.
Unreasonable misinterpretation of policy language.
Health providers you are referred to by your Insurer, not acting in the best interests of the patient/insured and/or acting for their own self-enrichment at the health expense and disadvantage of the patient.