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Ethics is a pretty important factor in any kind of claim investigation.

The courts take bias very seriously in claim investigation cases for obvious reasons, money being the motivating factor.

Of course, for some insurance companies, money or bonuses can be the motivating factor to skew a claim adjusters investigation into a claim.

Chip Merlin, over at Property Insurance Law Blog, commented on this issue in a recent blog post bringing to light a lot of interesting things I had never even heard of.

The first disturbing trend Merlin brings out is how insurance companies “fight and object” when a policyholder’s attorney asks for information regarding incentives for claims adjusters. The insurance companies attorneys obviously worry that this could prove bias in the eyes of the court.

In fact, State Farm was embroiled in a “landmark wrongful claims practice case” that went on for years because they refused to provide the documents for their personnel or the company’s goals. In the end and under a court order, the documents were relinquished and it was determined that State Farm was paying out bonuses to company employees to lower the amount paid out per claim.

Other insurance companies have apparently attempted to perform the same or similar stonewalling tactics as State Farm. The Merlin Law Group cataloged some of these examples here and they are quite interesting.

Here’s a few I personally liked (bolding added to emphasize ridiculousness):

“It is strong evidence of bad faith when an insurance carrier rejects the advice of its attorney in handling the negotiation and/or settlement of claims against the insured. As a corollary, the mere fact that the insurance company has followed its attorney’s advice is not a defense, but merely one fact to be considered by the jury in determining whether the insurance company acted in bad faith. ”

“The insurance company may be held liable for bad faith if it fails to promptly send a check after settlement agreement has been reached. ”

What do you think? Have you had experience with similar stonewalling tactics from insurance companies?