For a long time, insurance policies have been used as a safety net to protect people from life’s predicaments.
It’s unfortunate that some insurance companies have resorted to using unfair tactics and manipulative policies that offer little to no compensation. This has led to the concept of ‘bad faith’ becoming increasingly common in the insurance industry. Bad faith refers to an intentional act by an insurer to delay, deny, or reduce claims with little to no valid justification, which breaks the trust previously established in the contract.
The consequences of bad faith can be damaging. In some cases, policyholders may find themselves in a vulnerable financial situation, causing emotional distress. To avoid such scenarios, it’s essential to be vigilant when signing insurance contracts and recognize the “red flags” that could lead to bad faith. This can be your first defense against unscrupulous insurance companies.
This article will try to expose a few hidden traps that the insurers set and provide you with the knowledge you need to navigate the insurance space easily.
Look Out for Ambiguous Language
Insurance contracts often contain complicated legal jargon, most of which is unknown to an average policyholder. The complexity can be exacerbated by applying ambiguous words and phrases that often have multiple interpretations or need clarification.
Insurers can intentionally use ambiguous language to create room for manipulation or interpretation to favor them. Most of these ambiguous terms affect coverage and claims, leading to unfair treatment of policyholders.
Watch out for these critical red flags:
- Vague, open-ended terms: Words like “necessary”, “material”, and “customary” could be interpreted differently, and the insurer might use them for their advantage
- Contradictory statements: The presence of clauses contradicting each other is a recipe for conflict. Be aware of them.
- Undefined terminologies: Watch out for any unfamiliar term left undefined. The exact meaning could be a setup for you.
- Excess legalese: Look out for any overuse of legal jargon that an ordinary person would find difficult to comprehend.
- Ambiguous exclusions: Raise doubts on any clauses whose coverage does not include specific events.
Insurance companies will use ambiguous language as a loophole to deny your claims. If you need clarification on what particular clauses mean, consult a qualified personal injury attorney Michigan.
Unreasonable Exclusions
When you think you are fully covered, another red flag might pop up: unreasonable exclusions. These exclusions are clauses that try to exclude coverage for some typical and expected events under your cover, potentially limiting your compensation. Take a property damage policy excluding “acts of God,” for example. If the “acts” are not defined, you could be left vulnerable to the insurer’s interpretation.
Be very keen to check the fine print of your policy, as that is where unreasonable exclusions are often hidden. Be wary of any exclusions that might be very broad, going overboard even to cover unrelated risks. Ensure your policy only covers the risks you are particularly interested in.
Avoid accepting policy offers blindly. Compare and contrast policies from different insurers. Sometimes, you might even have to consult with a property lawyer who can help you decipher the policy terms.
Recognize Policy Terms Misrepresentation
Have you ever heard someone say they felt their insurance agent promised one thing but delivered another? That is a case of policy terms misrepresentation, and most times, it is done on purpose. This misrepresentation will leave you frustrated and vulnerable.
Ensure you maintain clear and documented communication since day one. Have records of every conversation, email, or any other correspondence, especially on discussions concerning coverage. These records will be your evidence in case the insurer brings any discrepancy. Always remember that verbal agreement is not held over written agreements in any court of law.
Whenever you suspect any misrepresentation of the insurance policy terms, seek clarification from any qualified attorney. Above all, be vigilant whenever a policy is presented to you.
Conclusion
Getting a grip on insurance can feel daunting, especially when insurance companies need to have your best interest in mind. However, with the correct information, you can navigate the insurance world and ensure you get the compensation you deserve. In this article, we will provide helpful insights to help you navigate the insurance realm more confidently and efficiently.
