When Your Own Insurance Company Acts in Bad Faith in Indiana: What It Is, How to Spot It, and What It Means for Your Claim

August 13, 2026

• You expect your insurance company to work for you. But it’ll often try to avoid paying what it owes. This can cross a legal line into what is known as “acting in bad faith.”
• Bad faith in Indiana comes when an insurer stops communication, delays unnecessarily, makes a lowball offer, or denies your claim without an investigation.
• Proving this can be hard, but doing so can increase your settlement. An Indiana car accident lawyer who knows how to prove bad faith and isn’t afraid of taking on the insurance companies can help you get what you deserve.

Insurance is, at its heart, a deal struck with a large company. You pay it money, month after month and year after year, without getting anything immediate in return. The deal, of course, is that when you do need the company, it’s on your side. There’s a sense that you paid it, now it works for you.

Unfortunately, too many Indiana drivers quickly recognize that insurance adjusters don’t work for them. They work for the insurance companies, and they get paid to pay out as little as possible. This is most obvious when you are in an accident with an uninsured motorist and need payment from your own company.

Sometimes what insurance companies do is legal even if ethically dicey. Other times they cross the line into illegal actions. When they do, that’s known as acting in bad faith, a rare legal term that captures the spirit of their actions. It’s important to know how to spot bad faith. Having a knowledgeable and tenacious Indiana car accident lawyer on your team can turn the insurance company’s bad faith into your good settlement.

Recognizing What “Bad Faith” Means in Indiana Law

There are a few telltale signs of your insurer acting in bad faith. The three primary ones are:

1. Delaying your settlement without reason.
2. Denying without investigation (in some ways this is the opposite of #1 in that everything is quickly shut down).
3. Offering a small percentage of what your claim is actually worth.

Needless to say, the insurance company won’t admit to doing any of these things. It’ll make excuses or pressure you into accepting its paltry offer.

Much of this is known as Common Law Bad Faith. That means the insurer has no real basis for its decision. This is actually a demanding standard to meet, like proving someone a liar. Difficult to demonstrate in court, but far from impossible.

There are also Statutory Unfair Claims Practices. Indiana Code § 27-4-1-4.5 lays out very specific actions that constitute bad faith. These include:

• Willfully misrepresenting the facts of the case or the terms of your policy.
• Failing to act reasonably or respond promptly to communications.
• Refusing to pay claims without investigation.
• Compelling you to instigate litigation by lowballing you (this is an expensive process that most people would prefer to avoid).

If any of these things happens, you might have grounds for a bad faith claim.

When Bad Faith Is Most Likely

When you call your insurance company after an accident, you hope to not need it. If the other driver is more responsible, it is the duty of his or her insurance company to pay out. However, sometimes you are hit by a minimally insured driver, and that changes your claim.

Let’s say you’re driving south from Indianapolis to Greenwood, near where 31 hits I-465, and get into an accident. There’s a 1-in-7 chance the driver doesn’t have the right insurance. Throughout Indiana, 14% of drivers are “underinsured,” meaning their coverage only pays up to $25,000 to a single injured party.

Your medical bills, lost wages, and pain and suffering could add up to much more.

In this case, you can file an Underinsured Motorist Coverage claim with your own insurance company – another thing you pay for – but the company may deny your claim by insisting that the driver who hit you has enough insurance.

One other way that the company may try to deny your claim is Unreasonable Fault Attribution. Remember, under Indiana law, if you are 51% or more responsible for an accident, you can’t seek compensation. So your own adjuster might try to pin more blame on you to weasel out of payment. That is also acting in bad faith.

Turning the Tables on Bad Faith

Here’s the good news: proving bad faith isn’t just about telling the insurance company that it’s wrong. It’s not just about getting what the company already owes you. It actually opens the door to damages beyond that. These can include:

• Attorney fees, which otherwise are not recoverable.
• Punitive damages, which can significantly multiply your settlement.
• Consequential damages, which can allow you to recover for other financial losses caused by delay or denial.

How do you obtain these damages? It isn’t easy. You need documentation. You need to prove timing. You need to show that the insurance company rushed a settlement, lowballed you, denied you with no investigation, or stopped communicating with you.

These facts have to come together to prove that the company crossed the line from frustratingly bureaucratic to illegal.

And that means having a legal team that isn’t afraid to pursue bad faith claims and knows how to win them.

Reach Out to Our Experienced Indiana Car Accident Attorneys

Bad faith claims are both obvious and subtle, both clear to you and hard to prove in a court of law. Doing so requires a legal team that knows how insurance companies act – and what they shouldn’t do.

The car accident lawyers who understand insurance companies and are ready to prove bad faith are at Hensley Legal Group, PC, a dedicated Indiana personal injury law firm whose experienced attorneys have been fighting on behalf of the wrongfully injured since 1998.

Simply call us at (317) 472-3333, chat with us online, or fill out our contact form now for a free consultation with a seasoned Indiana car accident attorney.