Asked in Insurance Bad Faith

Q: Is it legal for my insurance company to lie to me or knowingly withold information about my claim.

Related Topics:
1 Lawyer Answer
Richard E. Palumbo Jr.
Richard E. Palumbo Jr.
PREMIUM
Answered
  • Insurance Claims Lawyer
  • Cranston, RI

A: Unfortunately insurance companies (i.e. homeowner's insurance companies) often put profits ahead of people (i.e. homeowner's, business owners and insureds). Insurance companies regularly break the law and act in bad faith when handling insurance claims (i.e. property damage insurance claims like fire damage, water damage, wind damage, etc.). Property insurance companies will often try to interpret the insurance policy (i.e. an HO-3) in a manner to deny the insurance claim. The insurance adjusters who work for the insurance companies are trained to "adjust" (usually adjust the claim in a downward manner) your insurance claim. The insurance adjuster does not work for the insured and does not typically work in the best interests of the insured. If the insured acts in the same manner then the insured can be charged criminally. Insurance companies should also be held criminally responsible when committing fraud and acting in bad faith. There are laws that encourage insurance companies to avoid acting in bad faith. I often remind property damage insurance companies in our letters to avoid acting in bad faith by including the following note and a copy of the applicable unfair claims settlement practices. The below portion of Rhode Island's bad faith statute includes a prohibition against "misrepresentation" or telling a lie to the insured.

NOTICE TO INSURERS: DO NOT ACT IN VIOLATION OF THE UNFAIR CLAIMS SETTLEMENT PRACTICES ACT. IT IS AN IMPROPER CLAIMS PRACTICE FOR AN INSURER, ITS AGENT, ADJUSTER OR REPRESENTATIVE TO FLAGRANTLY AND CONSCIOUSLY DISREGARD THE UNFAIR CLAIMS SETTLEMENT PRACTICES ACT. VIOLATIONS OF THIS ACT MAY RESULT IN ATTORNEY’S FEES, COSTS AND EXPENSES AS WELL AS PUNITIVE DAMAGES. A COPY OF THE ACT IS PRINTED BELOW, WHICH DEFINES YOUR DUTY AS AN INSURER IN THE STATE OF RHODE ISLAND.

§ 27-9.1-3. Unfair claims settlement practices prohibited.

It is an improper claims practice for any domestic, foreign, or alien insurer transacting business in this state to commit any act defined in § 27-9.1-4 of this chapter if:

(a) Any of the following acts by an insurer, if committed in violation of § 27-9.1-3, constitutes an unfair claims practice: (1) Misrepresenting to claimants and insured relevant facts or policy provisions relating to coverage at issue; (2) Failing to acknowledge and act with reasonable promptness upon pertinent communications with respect to claims arising under its policies; (3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies; (4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear; (6) Refusing to pay claims without conducting a reasonable investigation; (8) Attempting to settle or settling claims for less than the amount that a reasonable person would believe the insured or beneficiary was entitled by reference to written or printed advertising material accompanying or made part of an application

In addition to the bad faith statutes, insureds have PALUMBO LAW to aggressively hold the insurance company accountable for committing fraud and bad faith against their insureds. As part of our real estate practice, we offer Property Damage Claims Adjusting, Property Damage Claims Settlement, Coverage Disputes, Denials and Litigation for insureds who have suffered property loss. For the best settlement call PALUMBO LAW before calling your insurance company. Tell your Insurance Company “NO” and Call Palumbo!

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.