Insurance Denials: Why You Shouldn’t Take “No” for an Answer
Policyholders pay their premiums, and, in return, they expect to have insurance coverage when the need arises. To their dismay, too many policyholders find that their legitimate claims are being denied. In addition to claims denial, bad faith insurance tactics may include unreasonably delaying processing or payments or making a quick, lowball settlement offers.
It is important to understand that insurance companies are in business for profit, and the less they pay out for claims, the more profit they make. If your insurer has denied a valid claim, refuse to take “no” for an answer. Instead, speak with an experienced personal injury lawyer about an insurance bad faith claim.
Insurance Company Bad Faith Tactics
Insurance bad faith encompasses a wide range of shady dealings on the part of insurance companies. The following are common examples of bad faith practices:
- Denying a claim for no reason: An insurance company should always give you a reason for denying a claim. You may have a bad faith claim against an insurer that has denied a claim for an invalid reason, or without giving a reason at all. For example, after an auto accident, your insurance company must give you a valid reason if it denies your claim for repairs.
- Offering less than a claim is worth: It is acting in bad faith when an insurance company intentionally makes you a lowball offer, for example, by offering to cover only a small portion of your medical expenses after a car accident, when you have considerably more medical coverage.
- Putting insurance company profits over paying a policyholder’s valid claim: It is bad faith for an insurance company to avoid paying a valid claim for the sake of its own profits. One example of these bad faith tactics is when an adjuster dealing directly with a truck accident victim uses intimidation, bullying, and other shady tactics to get the victim to accept a lowball settlement.
- Refusing to approve a physician referral: Workers injured on the job are sometimes referred by their authorized treating physicians to different doctors or specialists. The insurance company may fight the recommendation, which delays treatment until the injured worker can get the referral approved.
- Delaying payment: Insurance companies are engaging in bad faith tactics when they unreasonably delay payment of valid claims. For example, an insurer may approve repairs to a vehicle after a car crash, but delay cutting a check to the repair shop or the policyholder for several months.
- Failing to conduct a complete investigation promptly: Insurance companies are required under the law to handle claims in a timely manner. If you have a fire in your home, for example, and file a claim with your homeowners’ insurance, the insurer should act promptly to conduct a complete investigation. In some cases, insurance companies will delay the investigation or deny claims without fully investigating the incident.
Facts About the Insurance Industry
The American Association for Justice (AAJ) published a report on the ten worst insurance companies in America, which are raising premiums, denying claims, and refusing insurance to those who need it most. This report covers a range of insurance fields, including homeowners’, auto, health, life, and disability.
Researchers conducted a comprehensive investigation that included data from thousands of court documents, state insurance department investigations and complaints, FBI and SEC records, and testimony of former insurance agents and adjusters. The report states that:
- The U.S. insurance industry takes in more than $1 trillion in premiums annually.
- The property/casualty insurance industry is enjoying annual profits of more than $30 billion a year.
- In a recent year, CEOs of the top ten insurance companies earned an average of $8.9 million in property/casualty and $9.1 million in health insurance. Median insurance CEO earnings for the entire industry are $1.6 million per year.
Putting Profit over Policyholders
As stated in the AAJ report, some insurance companies have discovered that they make more money when they don’t pay claims. Their game is to deny, delay, defend – or do anything to avoid payouts. Some companies even have training manuals on how to avoid making payments. For example, Allstate’s stated mission is to earn a return for its shareholders. The company privately instructs its agents to use a hardball, “boxing gloves” strategy against its policyholders.
What to Do If Your Insurance Company Denies Your Claim
If you believe you have a valid claim and your insurance company has denied it, your best course of action is to speak with an experienced bad faith insurance attorney as soon as possible. The same holds true for any other insurance bad faith tactics, such as unreasonable delays in investigating or paying a claim.
Dan Sorey, our lead attorney, is a seasoned Texas and New Mexico trial lawyer with extensive experience in successfully representing injured people and effectively dealing with insurance companies. Contact The Sorey Law Firm P.L.L.C at (903) 207-5526 right away if you have been a victim of insurance bad faith.