5 Signs Your Insurance Company Is Acting in Bad Faith on Your Auto Claim

Dealing with the aftermath of a car accident is stressful enough. When your own insurance company, which you've paid for protection, starts creating obstacles, it can feel like a betrayal. While most insurance adjusters are professional, some may engage in practices that are not only unfair but may constitute 'bad faith.' Insurance bad faith is a legal term for when an insurer fails to uphold its contractual duty to a policyholder. Recognizing the signs of bad faith is the first step toward protecting your rights and recovering the compensation you are rightfully owed.

1. Unreasonable Delays in Processing Your Claim

One of the most common and frustrating bad faith insurance practices is the intentional delay in processing a claim. Insurance companies are legally required to investigate and process claims within a reasonable timeframe. While a complex claim may naturally take longer, unreasonable delays without a valid explanation can be a tactic to wear you down. The insurer might hope that the financial pressure and mounting stress will lead you to accept a quick, lowball settlement out of desperation.

These delays can manifest in several ways: long periods of silence, repeatedly asking for the same documents, or transferring your case between multiple adjusters with no progress. It’s crucial to document every interaction and send follow-up communications in writing. If an insurer is dragging its feet for weeks or months without a clear and justifiable reason, it's a significant red flag for bad faith insurance practices. [1]

2. Lowball Settlement Offers Below Actual Value

A primary goal of any insurance company is to minimize its payouts. However, when an insurer offers a settlement that is drastically below the actual value of your damages, it crosses the line into bad faith. These lowball offers are often presented with a sense of finality, pressuring you to accept before you understand the true cost of your vehicle repairs, diminished value, or total loss. Many insurers rely on algorithm-based valuation tools like CCC ONE or Mitchell to generate these offers, which often fail to account for the specific condition of your vehicle or local market realities.

Our firm was founded on the principle that valuations should be done by real people, not opaque algorithms. A certified appraiser conducts detailed research and accesses professional databases to determine a vehicle's fair market value. If you receive an offer that seems unfairly low, do not accept it. Instead, you have the right to challenge it with a comprehensive, independent appraisal that reflects the true value you are owed. An unjustifiably low offer is a classic sign of an insurance claim denied or underpaid in bad faith.

3. Denying a Valid Claim Without Proper Investigation

An outright denial of a valid claim is one of the most blatant forms of insurance bad faith. Every policyholder has the right to a thorough and impartial investigation of their claim. An insurer cannot deny a claim based on speculation, incomplete information, or without providing a clear, written explanation that references specific language in your policy. If your claim is denied, the insurer must give you a valid reason for their decision.

Unfortunately, some insurers may deny claims without conducting a proper investigation, hoping the policyholder will simply give up. They might ignore evidence you provide or fail to interview relevant witnesses. If you believe your claim was wrongfully denied, it is essential to formally dispute the decision. An expert appraiser can review the details of your case, assess the validity of the insurer's reasoning, and provide the certified documentation needed to fight back against bad faith insurance practices.

4. Failure to Communicate or Respond to Inquiries

Your insurance company has a duty to maintain clear and open communication with you throughout the claims process. When an adjuster consistently fails to return your calls, respond to your emails, or answer your questions, it may be more than just poor customer service—it can be a sign of bad faith. This tactic, often called 'ghosting,' is designed to frustrate you and create uncertainty about the status of your claim.

By keeping you in the dark, the insurer hopes to gain leverage. You might become so tired of the lack of response that you abandon the claim or accept an inadequate offer when one finally materializes. Always keep a detailed log of your communication attempts, including dates, times, and the nature of your inquiry. Sending your questions via certified mail can create a paper trail that is difficult for the insurer to ignore and can serve as powerful evidence in a bad faith dispute.

5. Misrepresenting Policy Terms or Coverage

Insurance policies are complex legal documents, and some companies may exploit this complexity by misrepresenting the terms of your coverage. An adjuster might tell you that certain damages are not covered when, in fact, they are. They might misinterpret policy language to limit the payout or even advise you against seeking legal or expert assistance. This is a serious breach of their duty to act in good faith.

Never rely solely on the adjuster's interpretation of your policy. You have the right to request a complete copy of your policy and review it carefully. If you suspect your insurer is misrepresenting your coverage to underpay or deny your claim, it is critical to seek an independent review. Our team of licensed appraisers and adjusters can help you understand your policy and determine if the insurance company is upholding its contractual obligations.

Your Rights and What to Do Next

If you recognize any of these signs, it's crucial to act strategically to protect your interests. First, document everything. Keep detailed records of all conversations, save all correspondence, and organize all your receipts and repair estimates. Communicate with the insurer in writing whenever possible. If you suspect bad faith, send a formal letter to the adjuster (and their supervisor) outlining your concerns and demanding a clear response.

Most importantly, understand that you do not have to accept the insurance company's decision as final. Nearly every auto insurance policy contains a provision known as the Appraisal Clause. This powerful but often overlooked clause gives you the right to hire an independent appraiser to determine the value of your loss. If your appraiser and the insurance company's appraiser cannot agree, a neutral third-party umpire is selected to make a binding decision. This process takes the power away from the insurer and puts it in the hands of impartial experts. Invoking the Appraisal Clause is one of the most effective ways to combat a lowball offer and force a fair settlement. [2]