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Are You Safe from Predatory Insurance Practices?

Are You Safe from Predatory Insurance Practices?

Insurance companies are invaluable players in the legal system because they purport to give their policyholders peace of mind that they will not be left destitute and without options should a tragic accident occur. However, insurance companies are also businesses, and it is in the interest of every business to protect its bottom line. This balance between protecting policyholders from adversity and also protecting profits can be easily upset, often with disastrous results for the policyholder.

Below, we’ll examine a few different predatory and bad faith insurance practices and go over some ways you can protect yourself from them.

Types of Predatory Insurance Practices

Although every case is different, there are a few predatory practices that are very common in the insurance industry, including:

  • Predatory sales practices: This practice often involves insurance agents holding seminars about finances, living trusts, and other insurance products. Some time after these sessions, an agent, who will often claim to be an “advisor,” will contact the attendees to set up a meeting at their homes. In those meetings, buyers can get pressured into purchasing an insurance product that is completely inappropriate for their needs.
  • Denying a claim without giving a reason: Insurance companies should always give you a reason for denying your claim.
  • Refusing to investigate a claim: Insurance companies are required to conduct proper and thorough investigations into all claims by their policyholders. If they refuse to do so, you may be dealing with a predatory agent.
  • Delaying payment of a valid claim: Insurance companies are required to pay on claims within a reasonable time frame, but they often drag their feet.
  • Offering significantly less money than a claim is worth: Insurance companies are well known for “low-balling” settlements, and they often refuse to budge from those offers.
  • Misrepresenting policy language: As consumers, policyholders often are not always aware of the more minute details of their insurance contracts, and predatory agents can and will exploit this ignorance.
  • Making threatening statements: It goes without saying that an agent or adjuster who is making threatening statements to you or otherwise acting unprofessionally is engaging in predatory conduct.

How to Protect Yourself Against Predatory Insurance Practices

If you feel that you are being taken advantage of in either the insurance buying or settlement process, there are several options available to you. First, if you believe that your agent or adjuster is acting in bad faith or a predatory manner, you should ask to speak to a supervisor in order to address your complaint. Be sure to gather as much proof of the behavior as possible. If that does not work you can also notify your state’s insurance board. Every state has insurance oversight boards that regulate the industries in their states, and to which members of the public can make complaints. Finally, if those two options do not work, you might want to consider hiring an attorney who will either attempt to resolve the issue through negotiation or file a civil suit on your behalf.