Recognizing When an Insurer Acts in Bad Faith and What to Do About It

Insurance is supposed to provide peace of mind. You pay your premiums, follow the rules, and expect your insurer to be there when disaster strikes. Unfortunately, West Virginians can discover the hard way that insurance companies sometimes delay or deny valid claims without justification. This is known as bad faith, and you have legal remedies when it occurs.

Under West Virginia’s Unfair Trade Practices Act, insurers must promptly and fairly investigate claims, communicate honestly, provide real reasons for denial, and try to settle claims where liability is clear. If these duties are violated, the policyholder may have a first-party bad faith claim with the potential for recovering significant money damages.

Bad faith insurance practices occur across many types of claims. The following are most common: 

1. Water damage claims — Insurers may try to deny coverage by reclassifying covered water damage as “flooding” or “surface water,” which are commonly excluded in policies. Or they may assert the loss resulted from “wear and tear” or poor maintenance. Sometimes, they allege the property owner waited too long to report the problem. These denials frequently ignore what the policy truly covers as well as the actual facts of the loss.

2. Fire and smoke damage claims — Despite the devastating nature of fires, insurers sometimes try to minimize the extent of smoke and odor damage, undervalue personal property losses or refuse to pay for the repairs or remediation needed. When an insurer acts on assumptions or relies on biased investigations, the denial may be improper under the policy and state law.

3. Roof damage claims (wind, hail and storm losses) — West Virginia storms cause legitimate roof damage, but insurers may mislabel storm damage as “age-related deterioration,” recommend quick-fix repairs when a full replacement is warranted, or ignore underlying structural issues. Such tactics unfairly increase out-of-pocket costs for homeowners.

4. Auto insurance claims — For liability claims, bad faith can occur when the insurer refuses to defend the insured in a lawsuit, fails to settle within policy limits when it should, or exposes the insured to excess judgments. Auto insurers also may dispute uninsured/underinsured motorist (UM/UIM) claims, medical payments, or total loss valuations.

5. Life insurance claims — These denials are particularly devastating. Insurers might allege misrepresentation on the application, assert that the policy has lapsed, or cite an excluded cause of death, often relying on minor technicalities or expansive policy interpretations.

6. Business interruption and commercial property claims — Wrongful denials can cripple businesses. Insurers may dispute the cause of loss, undervalue lost income, claim inadequate damage mitigation, or broadly apply exclusions not intended to bar coverage. These situations often require detailed review and expert analysis.

Delays and denials aren’t always wrongful, but many are. If the insurer ignores your evidence, drags its feet or states reasons for denial that don’t match your policy, you should consider seeking legal advice. An experienced insurance bad faith attorney can enforce your rights, challenge unfair denials and help you recover not just what you are owed but also damages for the insurer’s bad faith conduct.

Mehalic Law PLLC represents clients throughout West Virginia in insurance disputes. Call us at 304-873-9186 or contact us online to schedule a free consultation.