Most people assume insurance companies follow the rules. They’re large, regulated businesses operating within a legal framework, so the assumption feels reasonable. But insurance bad faith is real, it’s more common than people realize, and failing to recognize it costs injured people significant compensation every year.
The legal team at The Galliher Law Firm encounters bad faith practices in personal injury claims with enough regularity that it’s worth addressing directly. A brain injury lawyer will tell you that insurers have legal obligations to their policyholders and, in many states, to claimants, and that violating those obligations has legal consequences. Knowing what those violations look like puts you in a far stronger position. Here is what to watch for.
Unreasonable Delays Without Explanation
An insurer that consistently takes weeks to respond to communications, fails to acknowledge a claim within a reasonable timeframe, or repeatedly asks for documents already provided may not be investigating your claim. They may be running out the clock.
Delay is a strategy. Financial pressure builds. People accept lower offers out of exhaustion or desperation. When delays are unexplained, repeated, and disproportionate to the circumstances, they may cross from inconvenient into actionable.
Most states have regulations governing how quickly insurers must acknowledge and respond to claims. The National Association of Insurance Commissioners maintains a model claims settlement practices act that many states have adopted, setting baseline standards for timely claim handling. Your state insurance department enforces those standards.
Denying a Claim Without a Reasonable Basis
A denial is not inherently bad faith. Insurers deny claims for legitimate reasons. But a denial issued without a meaningful investigation, based on a misrepresentation of the policy language, or contradicted directly by the evidence available is a different matter.
If you receive a denial that doesn’t reference specific policy provisions, doesn’t explain the factual basis for the decision, or ignores evidence you’ve submitted, that denial warrants a careful second look and potentially a legal challenge.
Offering Substantially Less Than the Claim Is Worth
Low offers are part of the negotiation process. An offer that is so far below the documented value of the claim that it could not reasonably be justified by the facts is something else. This is particularly true when the insurer has access to the same medical records, wage documentation, and evidence that clearly supports a significantly higher number.
According to the Insurance Research Council, represented claimants consistently recover substantially more than unrepresented ones. Part of that gap reflects the fact that an attorney can recognize when an offer has no reasonable relationship to the claim’s documented value and respond accordingly.
Misrepresenting Policy Coverage or Applicable Law
Telling a claimant that something isn’t covered when it is, or mischaracterizing state law in a way that discourages the claimant from pursuing their rights, is a bad faith practice in most jurisdictions. It’s also one that injured people without legal representation are least equipped to identify.
Common examples include:
- Claiming no coverage exists for a type of damage that the policy clearly covers
- Misstating how comparative fault rules affect the claimant’s right to recover
- Understating the available policy limits when asked directly
- Misrepresenting the claimant’s rights under state law
These aren’t always mistakes. Sometimes they’re deliberate. And without someone who knows the law reviewing the insurer’s representations, the injured person has no way to know the difference.
Failing to Conduct a Proper Investigation
An insurer who makes a coverage or liability decision without reviewing available evidence, interviewing witnesses, or obtaining relevant records hasn’t done its job. Claims decisions are supposed to be based on investigation, not assumption. When the process is bypassed, the outcome is often predetermined and wrong.
What Bad Faith Actually Means Legally
Most states recognize a legal cause of action against insurers who act in bad faith. In some states, that claim can result in damages beyond the original policy limits, including attorney’s fees and in egregious cases, punitive damages.
The American Bar Association provides public guidance on insurance disputes and consumer rights that’s worth reviewing if you believe your claim is being mishandled.
Bad faith isn’t easy to prove, and not every frustrating interaction with an insurer rises to that level. But recognizing the warning signs early, and having a personal injury attorney who takes them seriously, changes what’s possible in terms of accountability.
If you believe an insurance company is mishandling your personal injury claim, we encourage you to speak with a personal injury law firm and get an honest assessment of whether what you’re experiencing crosses a line that deserves a legal response.