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Insurance Fraud vs. Insurance Bad Faith

A woman checking the difference between insurance fraud and insurance bad faith.

A lot of times, people use the terms “insurance fraud” and “insurance bad faith” interchangeably. In reality, the two terms refer to two completely different forms of misconduct. Consumers and insurance companies can commit insurance fraud in a number of different ways. We will elaborate on common forms of insurance fraud later in this article. On the other hand, insurance bad faith claims involve misconduct by insurance companies and their representatives. 

Although fraud and bad faith deal with different forms of misconduct, determining which one applies to you can be tricky. An insurance fraud claim lawyer at the D’Amore Law Group can help ascertain whether fraud or bad faith is occurring in your case. Contact us today; our team is here and ready to help. 

What Is Insurance Fraud?

When someone hears about insurance fraud, they typically think of consumers filing fictitious insurance claims to recover monetary compensation wrongfully. However, insurance companies can commit insurance fraud as well. Insurance fraud is the deliberate deception of or by an insurance company or its agents for financial gain. Insurance fraud costs consumers at least $80 billion per year, according to the Coalition Against Insurance Fraud. Approximately one in three people believe they were victimized in an insurance fraud scheme. Even though not all consumers commit insurance fraud, insurance fraud results in higher insurance premiums for everyone. Thus, even if you are not directly victimized in an insurance fraud scheme, you can feel the consequences whenever you pay your monthly insurance premiums.

Who Can Commit Insurance Fraud?

The parties that can commit insurance fraud include:

  • Policyholders;
  • Insurance applicants;
  • Third-party claimants;
  • Car dealerships;
  • Professionals who provided services to policyholders; and
  • Insurance agents and representatives.

According to a report published by the Coalition Against Insurance Fraud and SAS, approximately 84% of property and casualty insurers surveyed in late 2018 reported an increase in fraudulent insurance claims. If you think another party committed insurance fraud, one of our attorneys can help you determine if you have a claim. Contact us today so we can review your case.

Types of Insurance Fraud

There are a variety of different ways to commit insurance fraud. The most common ways include:

  • Lying about old damage to your car to include it in a claim and receive a larger insurance payout than an incident warrants;
  • Mechanics charging insurers for exaggerated costs of repairs;
  • Using a different address to secure a lower premium;
  • Churning insurance policy accounts;
  • Staging car accidents;
  • Fake or exaggerated injury claims following a car accident;
  • Installing or making counterfeit airbags;
  • Misrepresenting losses to your insurance company; and
  • Lying about the number of drivers in your household to get a lower premium.

As you can see, insurance fraud can occur in a number of different scenarios. If an insurance provider committed fraud that caused you to incur damages, an insurance fraud attorney at D’Amore Law Group could help you recover those losses. Contact us today to get started.

What Is Insurance Bad Faith?

Insurance bad faith occurs when an insurance company or its representative breaches their duty of good faith and fair dealing concerning a particular claim or client. All insurance providers have a duty to act in good faith. That means if they issue an insurance policy that provides certain coverage, they must, in good faith, provide that coverage in the event of a valid claim. It also means that an insurance company must take all necessary steps to investigate a claim thoroughly. That includes considering all circumstances surrounding the claim and responding to requests for information.

What Does It Mean to Act in Bad Faith?

Insurance bad faith claims typically arise when an insurance company fails to honor its contractual obligations. In other words, they should pay your claim, but they won’t. In these situations, you can pursue a claim against the insurance provider for acting in bad faith. 

Insurance companies make more money when they pay out as little as possible. Unfortunately, the desire to keep down costs can motivate agents to act in bad faith by making quick and tempting lowball settlement offers. They do this hoping that the client will jump at quick money and accept the low offer. The adjusters know that once a customer accepts a lowball offer, they can never come back for more regardless of how much more money they spend on their injuries down the road. 

Furthermore, the complexity of insurance documents can prevent everyday consumers from understanding their rights and knowing what their insurance policy covers. In turn, this can cause an insured party to accept a denied claim without realizing that the denial was improper. If you think an insurance company acted in bad faith by denying your claim, contact D’Amore Law Group today to discuss your policy.

Examples of Insurance Bad Faith 

When you select an insurance policy, you can pick and choose the types and amount of coverage you want. Insurance providers can act in bad faith by:

  • Delaying claims unnecessarily;
  • Denying legitimate claims that fall within your policy coverage;
  • Paying only a portion of a settlement;
  • Undervaluing claims;
  • Failing to investigate a claim;
  • Refusal to offer a reasonable settlement; and
  • Ignoring a claim.

If you can prove that your insurance company acted in bad faith, you can recover the amount you are rightfully owed in addition to the costs you incurred as a result of their bad faith. 

D’Amore Law Group Can Help Explain the Difference Between Insurance Fraud vs. Insurance Bad Faith Claims

In many circumstances, the only thing someone knows about insurance is that they need it. They do not know what their policy limits are or what their coverage means. When they file an insurance claim and that claim is denied, they might accept the denial without question. Unfortunately, some claim denials result from bad faith or insurance fraud. If you think your provider is committing fraud or acting in bad faith, contact us today to discuss your case.

Our team at D’Amore Law Group had decades of experience representing clients against insurance companies with the goal of securing justice for injured victims and their families. We have earned a reputation among insurance companies, corporations, and opposing counsel as skilled, aggressive, and experienced injury lawyers. Our team is committed to working closely with our clients and their families to help address any issue resulting from your accident. Contact us today.

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