How to Avoid A Bad Faith Investigation Claim
“Bad faith investigation” just SOUNDS…well, bad.
There exists a great deal of information outlining an insurance company’s “duty to investigate.” These duties can drastically vary by geography, line of business, and severity of the claim. The basic and general rule is that the investigation is “reasonable” however, several requirements that remain constant regarding ALL claims.
“An investigation must lead to an evaluation in any claim. Courts give no weight to investigative steps that do not lead to the insurance company’s evaluation of the claim.”
A bad faith claim against an insurance company typically focuses both on the process of the investigation and the decision based on the outcome (or non-outcome) of the investigation. If the investigation was complete and thorough and there was simply a coverage issue, there still may exist a breach of contract liability but there is a minimized risk of liability for bad faith. Conversely, if the coverage recommendation was incorrect, and the writer of the policy also failed to investigate the claim appropriately, there is an increased risk of bad faith. Because of these potential liabilities, a complete and appropriate investigation of a claim is vital to the avoidance of a bad faith claim.
This includes using common sense!
For Example: Cutting a hole in someone’s shrubbery in front of their house so that you can video the claimant inside their house – NOT REASONABLE!!
For Example: Starting to date and having an intimate relationship and going on vacation with the claimant – NOT REASONABLE!!
I know that the above sound far-fetched but they are based on actual case law.
In conclusion, the price of an investigation pales in comparison to the COST of improperly investigating a claim. Educate yourself on your company’s policies for investigating claims, hire an experienced claims investigator with skills specific to your needs and use critical thinking and common-sense skills to properly adjust claims. Please contact me at firstname.lastname@example.org or visit our site at www.capinvad.com.