If your case involves one of the five factors listed below, your insurer may be acting in bad faith.

1. Auto Insurance Claim is Less than the Value of the Car

Insurance companies use one of three methods to determine the value of a totaled car, including:

• Computerized vendor quotes;
• Value books, such as Kelley Blue Book; and
• A market search of the local area.

However, what constitutes a “local area” is not always defined, and it is often unclear which method the insurer will use to assess a vehicle’s value.

2. Insurer Significantly Increases or Cancels a Policy as a Result of a Claim

Insurance companies may not cancel a person’s coverage due to the fact that the policyholder was in an accident. If an individual has diligently paid his or her insurer’s premiums, but the insurance company significantly increases the cost of a policy or cancels it outright, the company has most likely failed to act in good faith.

3. Insurer Advises Claimant Not to Hire a Lawyer

Advising a client not to retain legal assistance constitutes a violation of an insurance company’s implied duty of good faith and fair dealing.

4. Intentionally Withholds, Misinterprets, or Misconstrues Claim Information

Insurance companies are not permitted to withhold material facts or misrepresent relevant information. If an insurer is aware of a policy’s provision that would allow for coverage of the accident, it cannot withhold that information without acting in bad faith.

5. Fails to Inform Policyholder of Coverage and Provisions in the Policy

Insurance companies are required to keep their clients informed of benefits and additional coverage detailed in a policy, and a failure to do so may indicate that the insurer is acting in bad faith.