Insurance is built on trust: you pay your premiums expecting that when you need help, your insurer will be there for you. Unfortunately, not every experience lives up to that promise. Among the most frustrating complaints policyholders face are concerns about unfair practices.

Today, as part of my Tuesday and Thursday series on common insurance frustrations, I'm covering the final topic on the list: unfair practices. We will examine what they are, how to recognize them, and what you can do to protect yourself if you think you have been treated unfairly.

What Are Unfair Insurance Practices?

Unfair practices in insurance occur when an insurer acts unethically, deceptively, or violates state laws and regulations. These actions can harm consumers financially, emotionally, or both.

Examples include:

• Misleading Policy Language: Advertising full protection but hiding important exclusions in fine print.
• Unreasonable Claim Denials: Refusing legitimate claims without valid reasons.
• Deliberate Delays in Claim Processing: Slowing the claims process will pressure the policyholder to accept a lower settlement.
• Underpayment of Claims: Offering a settlement far lower than reasonable based on the policy coverage.
• Improper Cancellation or Non-Renewal: Dropping a policyholder without a fair or legal justification.

Most insurance companies operate fairly, but when unfair practices happen, they create real financial strain and erode trust.

Real-World Examples of Unfair Practices

Example 1: Denied Roof Damage Claim After a Storm

A homeowner files a claim after a major hailstorm causes obvious roof damage. The insurer denies the claim, stating pre-existing conditions, even though there was no evidence of prior damage.

Example 2: Unjustified Cancellation for a Minor Violation

A driver gets a single speeding ticket and suddenly receives a policy cancellation notice without warning. This action violates state guidelines that allow cancellations only for significant or repeated infractions.

Example 3: Hidden Exclusion Discovered After a Loss

A policyholder believes their homeowners insurance covers sewer backup damage, only to learn after a major incident that the exclusion was buried in a complicated endorsement not properly explained.

How Unfair Practices Harm Policyholders

The financial risks of unfair practices are obvious: you may be stuck paying for repairs or replacement costs that should have been covered. But the emotional toll can be just as damaging. Fighting with an insurance company during a stressful situation adds frustration, confusion, and even feelings of betrayal.

Unfair practices can lead to:

• Out-of-pocket expenses for large losses
• Difficulty finding replacement insurance after cancellation
• Credit issues if unpaid claims or lapses affect your record

Loss of trust in insurance professionals.

How to Recognize Possible Unfair Practices

It's not always easy to spot when an insurance company crosses the line. Some signs you might be dealing with an unfair practice include:

• Denials Without Clear Explanation: A refusal to pay a claim without a specific policy reference.
• Delayed Communication: Repeated delays in returning your calls, processing paperwork, or updating you on the claim status.
• Inconsistent Information: Different representatives are giving you different answers about your coverage.
• Changing Terms After a Loss: An insurer suddenly introduces new conditions not part of the original agreement.
• Pressure Tactics: Being pressured to accept a quick settlement that seems lower than it should be.

Trust your instincts. If something feels off, it is worth investigating.

What to Do If You Suspect Unfair Treatment

If you believe you have been treated unfairly, you do not have to accept it. Take these steps to protect yourself:

Step 1: Review Your Policy Thoroughly

Go over your policy carefully. Understand the exact wording of your coverage, limits, deductibles, and exclusions. This helps you argue your case with solid facts.

Step 2: Document Everything

Keep detailed records of:

• Calls, emails, and letters
• Names of the representatives you spoke with
• Dates and summaries of conversations
• Copies of bills, repair estimates, and correspondence

The more documentation you have, the stronger your case.

Step 3: Work with Your Insurance Agent

A knowledgeable and client-focused agent can step in to:

• Clarify your coverage
• Advocate for you with the claims department
• Escalate issues within the carrier if necessary

Having an experienced agent in your corner often leads to faster and fairer resolutions.

Step 4: File an Internal Appeal

Most insurance companies have internal grievance processes. Submitting a formal appeal forces them to review your case again, often with a different adjuster or claims supervisor.

Step 5: Contact Your State Insurance Department

Each state has an insurance commissioner or department tasked with protecting consumers. They can investigate complaints, mediate disputes, and sometimes fine insurers for bad behavior.

Find Your State's Insurance Department Here

Step 6: Seek Legal Advice if Needed

Consulting an attorney who specializes in insurance law can be an effective last resort for large disputes or serious cases of bad faith.

How an Insurance Agent Protects You from Unfair Practices

One of the strongest defenses against unfair practices is working with a trustworthy, experienced insurance agent. Here is how an agent helps safeguard you:

• Policy Clarity: Making sure you fully understand what your coverage includes and excludes.
• Carrier Selection: Steering you toward reputable carriers known for fair claims handling.
• Advocacy: Intervening if your claim is delayed, denied, or underpaid without good reason.
• Annual Reviews: Regularly check that your coverage matches your needs and adjust when necessary.

When you have the right agent, you have someone who fights for your interests, not the insurer's bottom line.

Stay Protected and Empowered

Insurance should provide peace of mind, not create new problems when you need help the most. While unfair practices happen, knowing how to recognize them, respond, and having the right advocate makes all the difference.

If you are unsure whether your current policy truly has your back or you have concerns about how a past claim was handled, let's chat. I will help you review your coverage, explain everything clearly, and make sure you are protected by a carrier and policy you can trust.

Click here to schedule your free insurance review or contact me today.

Thanks for following along in this series. Stay tuned for future posts where I continue to break down insurance topics with clarity, honesty, and your best interests at heart.