Bad Faith Red Flags Checklist

How to Tell if Your Insurance Company Is Acting in Bad Faith

Insurance companies in PA, NJ, NY, and MD are required by statute and common law to handle your claim in good faith. When they don’t, the law gives you remedies that go beyond the underlying claim — sometimes including attorney’s fees, interest, and punitive damages. This checklist gives you the early warning signs so you can act before the carrier’s tactics put your case at risk.

Red Flag #1 — Long, Unexplained Delays

Your carrier is required to acknowledge your claim within a reasonable time and to investigate without unnecessary delay. PA’s Bad Faith statute (42 Pa.C.S. §8371), NJ’s Unfair Claim Settlement Practices Act, NY Insurance Law §2601, and MD case law all impose timing standards. If 30, 60, or 90+ days pass without substantive movement and no honest explanation — that’s a flag.

Red Flag #2 — Lowball Settlement Offers Disconnected from Documented Damages

A lowball offer — say, $3,000 on a documented $40,000 medical-expense claim — that the carrier refuses to justify is one of the strongest indicators of bad faith. Pay attention to whether the adjuster is explaining their valuation logic. Silence or “the computer said so” is a flag.

Red Flag #3 — Repeated Requests for the Same Documents

Carriers sometimes use document requests as a delay-and-frustrate tactic. If you’ve already provided medical records, accident reports, repair estimates, and witness statements, and the carrier keeps asking for the same items in different forms — that’s a flag.

Red Flag #4 — “We Need a Recorded Statement Before We Can Move Forward”

You are NOT required to give a recorded statement to the at-fault driver’s insurer (or sometimes even your own). A carrier that conditions claim handling on a recorded statement is often gathering soundbites for later denial. Talk to a lawyer before agreeing.

Red Flag #5 — Refusing to Disclose Policy Limits

In PA, NJ, NY, and MD, claimants typically have rights to the policy declarations. A carrier that refuses to confirm liability limits is often hiding information that would change your demand strategy.

Red Flag #6 — “Your Claim Is Denied” Without a Specific Coverage Citation

A denial that doesn’t quote the specific policy provision and explain how it applies is a flag. Carriers are required to give you specific reasons, not vague “we don’t cover that” letters.

Red Flag #7 — Misrepresenting What the Policy Covers

If the adjuster tells you the policy doesn’t cover something that the policy clearly does cover — and you can show that misrepresentation in writing — you may have a textbook bad-faith claim.

Red Flag #8 — Inadequate or Sham Investigation

The carrier is required to conduct a reasonable investigation. If they denied without ever inspecting the loss, talking to witnesses, or reviewing your records — that’s not investigation; that’s a denial dressed up as one.

Red Flag #9 — Threatening to Cancel or Non-Renew If You Push Back

Some carriers use the threat of cancellation as leverage. In most states, retaliatory cancellation in response to a legitimate claim is itself a violation.

Red Flag #10 — “Take Our Offer Before It Expires”

Pressure tactics — short deadlines, “exploding” offers, repeated calls demanding a decision — often signal a carrier trying to close cheap before you get represented. A reasonable offer does not need an artificial deadline.

What To Do If You’re Seeing These Flags

1. Document everything in writing. Email beats phone calls. Save voicemails. Keep a contemporaneous log of every conversation with the adjuster.
2. Request the claim file. You may be entitled to a copy of the carrier’s claim notes and adjuster log.
3. Stop talking to the carrier directly. Once you have an attorney, all communication runs through counsel. The carrier knows the rules change at that point.
4. Call us at (610) 255-7500 for a free bad-faith review. Bad-faith cases are often more valuable than the underlying claim — sometimes substantially so.

Statute References by State

• Pennsylvania: 42 Pa.C.S. §8371 (insurance bad faith); 40 P.S. §1171.5 (Unfair Insurance Practices Act)
• New Jersey: N.J.S.A. 17:29B-4 (Unfair Claim Settlement Practices Act); first-party bad faith recognized at common law (Pickett v. Lloyd’s)
• New York: Insurance Law §2601; common-law bad faith
• Maryland: Insurance Article §27-1001 (failure to act in good faith); Md. Cts. & Jud. Proc. §3-1701 (bad-faith remedy for first-party claims)

If three or more of these flags describe your claim, call us today at (610) 255-7500. Bad-faith claims have statutes of limitations that run independently of the underlying claim, and many evidentiary windows close fast. Free case review on contingency.