What Is Bad Faith During An Insurance Claim?

​What comes to mind when you hear “bad faith” being used in a sentence with “insurance claims processing”?

• As contractors it’s important to understand the terms we use when negotiating the scope and cost of a project.
• As consumers it’s important to know what you should expect during the claims experience.

According to the International Risk Management Institute, Inc. (IRMI), bad faith is, 

A term describing blatantly unfair conduct that exceeds mere negligence by an insurance company. For example, a bad faith claim may arise if an auto liability insurer arbitrarily refuses to settle a claim within policy limits, where an insured's liability is incontrovertible. 

How Does Bad Faith Affect Contractors?

Our local networking group for restoration contractors and claims professionals will be discussing “bad faith” with licensed public adjuster and respected claims umpire, Roger Howson. If you are in Washington State, or the PNW, reach out to The DYOJO regarding the Fellowship of Construction Knowledge and Entrepreneurial Development (FoCKED).

• We meet the second Tuesday of each month - usually hosted by a local restorer
• Our group is discussion driven - identify issues and collaborate to conquer them 
• We are selective but not exclusive - our goal is to be of value to the local insurance claims ecosystem
• June Meeting (009) - Tuesday, June 14, 2022 - 10-1130am - Auburn, WA

In preparation for our conversation, we discovered this helpful from the Law Offices of Edward Cross. Brian K. Theis outlines three factors involved in determining whether there have been violations of the covenant of good faith and fair dealing for insurance claims.

How Does Bath Faith Affect Homeowners?

Insurance policyholders, which includes all homeowners, want to have the confidence that their policy will make them whole in the event of a water for fire damage to their greatest asset; their homes. Use this information to educate yourself and bolster your ability to advocate for what is right during the claims negotiation process. 

If you want to prevent unfair conduct during an insurance claim:

• You must educate yourself on how the process should work. Homeowners should work with a local insurance agent who understands the claims process and will be your advocate when the worst case occurs. Some local agents will simply refer you to the 1800 number for your insurance carrier and will have little involvement in the process. 
• Seek out the help of a qualified local contractors to assist you with assessing the extent of your damages and compose an estimate to restore your damaged property to resemble pre-loss conditions.