To avoid litigation from insureds, what must insurers refrain from doing?

Insurers aim to maintain fair and equitable relationships with their clients, and offering substantially less than amounts ultimately recovered is crucial in that regard. When insurers provide settlement amounts that are significantly lower than what an insured may rightly deserve given the circumstances of their claim, it can lead to dissatisfaction and a feeling of being treated unfairly. This situation creates the potential for disputes and could ultimately result in litigation as the insured seeks to recover the full value of their claim.

By contrast, offering amounts equal to the claim values reflects fairness and can help build trust. Delaying all insurance payments creates frustration and further issues for the insured, while providing incomplete information on claims undermines transparency and can lead to misunderstandings about the claims process. However, consistently offering significantly low settlement amounts is particularly damaging as it suggests a disregard for the insured's needs, fostering conflict and increasing the likelihood of legal action.