Attorney David J. King


Are delays in home insurance claims grounds for bad faith?

On Behalf of | Apr 19, 2023 | Insurance Bad Faith

When it comes to homeowners’ insurance, timing is critical. You’ll need your insurer’s payouts to cover expenses such as repairs for hail damage, roof replacements, water damage remediation, etc. And why shouldn’t they? South Dakota is one of the most expensive states for home insurance – if you’re paying a premium for your premiums, your insurer better make good on your coverage terms.

But what if your insurer is taking too long to process payments? Can you hold them accountable for the delays?

South Dakota’s regulations on insurance payments

First, you must understand how state laws affect insurance payout timings.

Each state insurance regulator has enforced a timeframe for insurers to pay after accepting a claim. In some states like New York, Minnesota, and Texas, insurers only have five days from accepting a claim to reimburse the policyholder. States like California, Illinois, and Hawaii require insurers to pay within 30 days.

However, South Dakota is one of 16 states (as well as the District of Columbia) where insurance regulators don’t have a set time limit for insurance payments. Because there’s no cap on the days until an insurance payout, you could potentially wait for months.

When is an insurance payment delay considered unreasonable?

Delays in your insurance claim can happen for several legitimate reasons – perhaps the damage is so significant that they need more time to work things through. But some insurers could be purposefully delaying payment, which could be grounds for bad faith. Here are several signs that your insurer is potentially holding back on your payments:

  • Delays in communication: Insurers usually respond quickly to their policyholder’s claims – unless a statewide disaster has them swamped with calls. Be warned if you feel it’s taking too long for your insurer to answer your messages.
  • Delays in adjusting: Your insurer should send an adjuster immediately to your home to investigate the damage and help resolve the claim quicker. But look out if it takes your insurer too much time to assign an adjuster or if the adjuster delays their investigation for no good reason.
  • Excessive document requests: Documentation is essential in any insurance claim, but if your insurer keeps asking for more pictures, receipts, and proofs, you might want to be on your guard – especially if your insurer is asking for information unrelated to your home insurance claim.

Insurance is all about timing, especially if you’re filing a home insurance claim following a calamity. If your insurer tries to find ways to delay your payment, consider seeking legal advice before you file a bad-faith lawsuit.