Insurance helps protect people from sudden, unexpected expenses. Typically, those with insurance should be able to rely on the company to uphold the policy as written. Every large claim represents a reduction in profits for the insurance company.
Can insurance providers modify the terms of a policy to reduce losses and increase customer obligations in response to a large claim?
Policy terms are set upon purchase
Typically, policyholders purchase coverage that lasts for a year. Regardless of whether they pay monthly or all at once, they establish the terms for their coverage, including policy limits and deductibles, as they negotiate their purchase or renewal of the policy.
If a policyholder files a claim, the insurance company cannot lower their coverage or increase their deductible in response to the claim. The policyholder may find that their coverage costs more the next year due to their prior claim. In some cases, large claims can even affect eligibility for inclusion in a specific pool of policyholders.
However, those issues relate to future coverage, not the current policy that is in effect at the time of their claim. Insurance companies should uphold the policies that they underwrite in good faith if policyholders need coverage. Attempts to manipulate people into accepting less than they deserve or paying more than they agreed to when setting their deductible could constitute bad faith insurance practices.
Those struggling to work with their insurance providers may benefit from reviewing their policy paperwork and claims communication with a legal professional. In some cases, a bad faith insurance lawsuit could be an option for those dealing with unethical and manipulative conduct during a claim.
