Several Transamerica policyholders are now a part of a class action lawsuit filed in a federal court in Los Angeles, alleging that the insurance company has acted in bad faith.

According to court documents, the plaintiffs (i.e., the policyholders) who purchased their policies decades ago are now being forced to either pay nearly double the rates they had previously been paying or lose their insurance policies altogether.

Background on the Bad Faith Allegations

The policies in question are universal life insurance policies that Transamerica sold along with promises to pay back a guaranteed monthly interest rate of no less than 5.5%, as well as to pay out any death benefits, so long as the policyholders consistently paid monthly their premiums (into a policy savings account) on time.

Some of these faithful premium payers are now in their golden years and living on fixed incomes – making the rate increases a strain to meet (if even possible). And while that is certainly problematic, so too is the fact that the universal life insurance policies are essentially contracts (between the insurer and the policyholders). In other words, the sharp rate increase constitutes a breach of contract and, consequently, bad faith practices, according to the plaintiffs in this case.

As attorneys for the plaintiffs have explained, Transamerica is attempting to recoup losses it sustained from low interest rates dating all the way back to the Great Recession, while it uploaded billions in profits to its parent holding corporation. Likewise, they allege that policyholders will be forced to drop coverage at a time in their lives that they need it the most due to the newly restructured premium payments.

Signs of Bad Faith Insurance Practices

It remains to be seen whether the courts will side with the plaintiffs and hold Transamerica accountable for its questionable (if not outright bad faith) practices. While we will track this story and provide the latest news on it as it becomes available, the following are some of the most common warming signs of insurance bad faith practices.

Being aware of these bad faith red flags can empower you to protect your rights:

  • Delaying, discounting, or completing denying payment on a valid claim without a reasonable excuse
  • Failing to investigate or issue a decision on a claim in a timely manner
  • Relying on unconventional investigation methods to evaluate a claim
  • Requiring policyholders to provide unnecessary information and/or failing to review policyholders’ evidence when investigating claims
  • Altering the terms of a policy after a claim has been submitted and without notifying the policyholder (This illegal practice is known as post-claim underwriting).

Battling with an Insurer Over a Policy or Payout? Contact a Denver Personal Injury Lawyer at the Klibaner Law Firm

If you are fighting with an insurance company and you may have been the target of any type of bad faith insurance practice, contact a Denver personal injury lawyer at the Klibaner Law Firm to find out more about your options for recovery and justice. Call us at (303) 863-1445 or email us using the contact form on this page to set up a free initial consult with one of our lawyers. From our offices based in Denver, our attorneys provide superior representation to injured people throughout the Denver metro area and Colorado.