Although insurance provides support during difficult times, managing a complex claim can feel overwhelming. Many people breathe a sigh of relief when they receive an insurance settlement offer. They don’t have to continue negotiating with the insurance professional and can start addressing their expenses.
A homeowner who needs to repair after significant storm damage may be eager to receive a settlement and move forward with repairs. However, midway through the project, they may realize that the settlement is insufficient given the extent of their losses. They may hope to request additional support from the insurance company. What they may not have realized previously is that settling typically absolves a insurance company of any future responsibility for losses.
Is bad faith insurance litigation an option if a policyholder accepted a settlement?
Settlements can be inappropriate
Bad faith insurance practices involve deliberate attempts to avoid upholding the terms of a policy. Misrepresenting what the policy covers, lying to a policyholder about their rights or manipulating them into accepting less than they deserve given their policy limits and losses could constitute bad faith insurance practices.
If a settlement offer is substantially lower than the reported losses and the applicable policy limit, the situation could warrant bad faith insurance litigation. Policyholders may need to review the documentation submitted to the insurance company, the policy paperwork and any communications they had with insurance professionals.
Successful bad faith insurance litigation can lead to increased compensation for those who might otherwise end up covering losses out of pocket. Reviewing the terms of a settlement with a skilled legal team could help policyholders assert their rights when insurance professionals put company profits ahead of upholding obligations to policyholders.