The Red Flags That Your Insurance Company May Be Acting In Bad Faith

When you file an insurance claim, you expect your insurer to treat you fairly, investigating your claim promptly, honoring the terms of your policy, and paying out what you’re owed. Unfortunately, that’s not always the reality. If you have been injured in an accident, a Tampa, FL car accident lawyer can provide you with legal advice and guidance on what your next steps should be.

In some cases, insurance companies engage in bad faith tactics—unfair, deceptive, or dishonest practices designed to limit or avoid paying valid claims. Knowing the warning signs can help you take action before it’s too late.

What “Bad Faith” Really Means

In legal terms, bad faith refers to an insurer’s breach of the implied covenant of good faith and fair dealing—the legal duty to act honestly and fairly toward policyholders. This duty is recognized in most states and forms the foundation of the insurer-policyholder relationship.

Bad faith goes beyond making an honest mistake. It’s about knowingly acting unfairly, either through delay, deception, or outright denial of coverage. If proven, bad faith can entitle you to compensation above your original claim amount, including punitive damages.

For a detailed breakdown of how bad faith laws work, visit FindLaw’s guide on insurance bad faith claims.

Red Flags That Your Insurance Company May Be Acting In Bad Faith

Unreasonable Delays in Processing Your Claim
While some claims naturally take longer due to complexity, insurers are required to process them in a timely manner. If you’re repeatedly asked for the same documents or your claim drags on without clear explanation, this could be a sign of intentional delay. See how Forbes Advisor outlines delay tactics that harm policyholders.

Failure to Provide a Clear Reason for Denial
A legitimate denial should reference specific policy language and explain exactly why the claim was rejected. If you only get a vague explanation like “not covered” or no explanation at all, this is a major red flag. Learn more about the requirement for clear explanations on Nolo’s insurance claim denial resource.

Misrepresentation of Policy Terms
Sometimes insurers twist or misinterpret policy language to limit their payout. This can involve ignoring endorsements, using outdated policy versions, or leaving out key coverage details. LegalReader explains why policy misrepresentation is a hallmark of bad faith.

Lowball Settlement Offers
Negotiation is expected—but if the insurer offers far less than your documented losses (without justification), they may be attempting to pressure you into accepting less than you’re owed. Check out Claimsmate’s list of lowball tactics to spot these patterns.

Inadequate or Rushed Investigation
An insurer has a duty to conduct a thorough investigation before denying or underpaying a claim. If they deny coverage without reviewing evidence like police reports, medical bills, or expert opinions, that’s a serious sign of bad faith. See LegalClarity’s breakdown on what constitutes an adequate investigation.

Delaying Payment After Approval
Even after a claim is approved, payment should be issued promptly. Long delays with no explanation may be a stall tactic—and in some states, they’re illegal.

Why Recognizing Bad Faith Early Matters

Bad faith practices aren’t just frustrating—they can have serious financial and emotional consequences:

• Medical bills pile up if treatment is delayed or denied
• Repairs are postponed, leaving you without transportation or a safe home
• Stress and anxiety grow as uncertainty drags on

In many states, you can sue for bad faith to recover extra damages beyond your original claim, including emotional distress, attorney’s fees, and punitive damages meant to punish the insurer. Read more on LegalReader’s damages overview.

How To Protect Yourself Against Bad Faith Before It Happens

While you can’t control an insurer’s internal practices, you can take steps to make it harder for them to act in bad faith:

• Understand your policy before you need it. Review coverage limits, exclusions, and deductibles so you know exactly what you’re entitled to. The Insurance Information Institute offers great policy breakdowns.
• Communicate in writing when possible. Emails and letters create a paper trail that’s difficult for insurers to dispute later.
• Respond promptly to all requests. If an insurer asks for documents or forms, send them quickly to prevent excuses for delay.
• Keep detailed records. Note every call, who you spoke with, and what was said.
• Involve an attorney early in complex claims. For large claims, legal guidance from the start can discourage bad faith behavior and keep the process on track.

Knowing Your Legal Rights

Every state has laws that protect consumers from bad faith insurance practices, but the details vary widely. In Florida, for example, insurers can face statutory penalties if they fail to settle a claim in good faith when they could and should have done so.

Many states also allow you to recover:

• Your original claim amount (policy benefits)
• Interest and attorney’s fees
• Additional damages for emotional distress or financial loss
• Punitive damages to punish the insurer and deter similar conduct

The National Association of Insurance Commissioners offers public resources that can help you understand the complaint process and regulatory protections in your state.

Real-World Example

In the case of Hollock v. Erie Insurance, the insurer delayed a valid claim, misrepresented policy terms, and withheld payment for years. The Pennsylvania Supreme Court found the insurer had acted in bad faith and awarded more than $2.8 million in punitive damages—sending a strong message to the industry. Learn more about cases like this in Nolo’s bad faith library.

Why Acting Quickly Matters

Time is critical in bad faith cases. Many states have strict deadlines—known as statutes of limitations—that limit how long you have to bring a claim. Waiting too long could mean losing your right to recover damages entirely.

Acting promptly also increases your chances of gathering strong evidence before it disappears. Emails get deleted, adjusters move on, and records get “lost.” The sooner you document and take legal action, the stronger your position.

The Bottom Line

Your insurance policy is a promise. When that promise is broken, you don’t have to face it alone.

At Mickey Keenan P.A., we fight for policyholders across Florida who have been treated unfairly by their insurers. We understand the tactics insurance companies use to delay or deny claims—and we know how to hold them accountable. If you suspect your insurer is acting in bad faith, contact us today for a free consultation. We’ll review your case, explain your rights, and outline a plan to protect your claim and pursue the full compensation you deserve.