Why Do Insurance Companies Delay Payment?
If you or a loved one have been injured due to the careless or negligent actions of another individual or entity, you may be entitled to various types of compensation for your injuries. However, there are times when insurance carriers delay payments for your claim, even if the claim is valid under the terms of your policy. Here, we want to discuss some of the reasons that insurance companies may delay payment, as well as what you can do to fight back and secure the compensation you are entitled to.
Why would an insurance carrier delay payments?
Insurance companies are typically “for-profit” entities that have one goal in mind, and that is to pay as little as possible in claims to ensure their bottom line continues to grow. Unfortunately, this profit-driven business is not always good for the policyholder. Most delay tactics that insurance carriers use are meant to bully the policyholder into accepting taking a lower settlement amount than they should rightfully be awarded. After any covered accident, the economic repercussions for an injury victim continue to grow, thereby increasing the financial strain on the victim. This can create a sense of desperation for the policyholder, leading to them becoming willing to take the lower settlement.
In some instances, insurance carriers may even delay a claim in retaliation against a policyholder for exercising their rights to the coverage listed under the terms of the insurance contract.
The delays that insurance carriers use can take many forms, including:
- Unreasonable delays when responding to claims
- Delayed communication when responding to submitted claims
- Delaying an investigation into the incident in question
- Misrepresenting various aspects of the claim or the terms of the insurance policy in an attempt to delay the proceedings or to encourage the claimant to accept a low settlement or drop the claim altogether
The longer an insurance company can delay paying out a valid claim, the more money they ultimately make. Insurance carriers make money through premium payments and the interest on those payments as they sit inside high-yield savings or investment accounts.
Is delaying a claim considered bad faith insurance practices?
Policyholders need to be aware that instances of delayed payments could be considered bad faith insurance tactics on the part of the insurance carrier. The law governs insurance carriers in California, and they are required to operate in good faith and fair dealing with everybody they sign a contract with.
As a policyholder, if you are experiencing a delayed payment from your insurance carrier, you may need to seek assistance from a skilled attorney who has experience handling bad faith insurance claims. A bad faith insurance attorney will be able to review the initial case behind your insurance claim as well as your entire insurance policy to gain a thorough understanding of how the insurance carrier is violating your rights. If you have a valid bad faith insurance claim, you may be able to secure compensation for the original claim as well as compensation as part of a bad faith insurance lawsuit.