Long-term disability (LTD) insurance pays benefits to those who cannot work because of a disabling condition. But there are cases when insurance companies are in bad faith, unfairly denying or delaying valid claims. In San Diego, a city with a diverse economy and active lifestyle, residents can find themselves dealing with such issues. In these kinds of situations, it is essential to seek the services of a San Diego long-term disability insurance attorney in order to better navigate these types of complicated situations.
What is a Bad Faith Claim?
A bad faith insurance claim occurs when an insurance firm refuses to meet its contractual terms with its policyholders. Such situations involve unfair denial of benefits, unreasonable delay in claims processing, or poor investigations into claims. Such conduct is a breach of the implied covenant of good faith and fair dealing that is inherent in all insurance contracts. Consulting a long-term disability insurance attorney in San Diego can help policyholders navigate these complex situations and seek fair compensation. The Coalition Against Insurance Fraud estimates that insurance fraud drains the U.S. economy by about $80 billion each year, which underscores the enormous effect of unethical behavior in the industry.
Examples of Bad Faith in Long-Term Disability Claims
Misinterpretation of Policy
Insurance providers can intentionally misread policy language in order to deny coverage. For example, they could define “disability” extremely narrowly so that it leaves out specific conditions, even if the policy owner’s illness should rightfully be included. This practice unfairly denies deserving people their rightful benefits.
Unjust Denial of Claims
Some insurers fail to pay genuine claims without due reason. For instance, USAA and its subsidiaries in 2023 refused to pay nearly 48% of homeowners’ claims, much higher than their 2010 denial rate of less than 38%. Insurers’ very high denial percentages have generated allegations of bad faith on the part of insurers.
Inadequate Investigation
Legitimate investigation is the key to testing the validity of LTD claims. Inadequate investigations may cause wrongful denials. For example, in Honda Canada Inc. v. Keays, Kevin Keays was terminated by the employer after he declined to discuss his medical fitness with a physician appointed by the company without having the purpose of the consultation specified. The employer was held in bad faith since it failed to accommodate Keays’ medical condition reasonably.
Unreasonable Delay
Delaying the processing or payment of claims without valid reasons is another form of bad faith.
Such delays can cause significant financial hardship for policyholders awaiting benefits. For example, in Australia, the superannuation fund Cbus faced legal action for delaying over 10,000 death and disability claims. One example was the case of Ian Martis, who waited a year for payment of the death benefit from his son’s Cbus super fund when his son passed away unexpectedly at age 28. Delays like this have led to investigations and stressed the negative effect on beneficiaries.
How to Dispute a Bad Faith in an LTD Claim
Understand Your Policy
Read your insurance policy carefully to understand your coverage, exclusions, and what your insurer has to do.
Document Everything
Maintain detailed records of all communications with your insurer, including emails, letters, and phone calls, noting dates, times, and the representatives involved.
Seek Legal Counsel
Consulting a legal professional experienced in insurance disputes can provide guidance tailored to your situation. In San Diego, numerous attorneys specialize in LTD claims and can assist in navigating the complexities of bad faith cases.
File a Complaint
If you suspect bad faith practices, report the issue to your state’s insurance regulatory agency. In California, the Department of Insurance handles such cases and can conduct investigations into insurers’ actions.
Consider Legal Action
If so, sue the insurer for breach of contract and bad faith. Successful litigation can lead to the recovery of denied benefits, damages for emotional distress, and sometimes punitive damages to discourage future abuse.
Conclusion
Bad faith behaviors in long-term disability insurance have far-reaching implications for policyholders, which can make matters worse during the disability phase.
Being able to identify bad faith signs and know the steps involved in challenging such acts is very important in protecting one’s rights.
San Diego, where living costs are fairly high, receiving well-deserved LTD benefits is very important in being able to keep up during tough times. By being educated and looking for the right legal help, policyholders are able to successfully fight unfair practices and receive the help to which they are entitled.
