The First 5 Things to Do If Your Insurance Claim is Denied

If you or your small business has been harmed by a large insurance company or other big organization, there's a good chance strong legal advocacy can help you to make it right.

If the problem is a refusal to pay an insurance claim, the starting point is to recognize the reality is that insurance companies make money when they don't pay claims.

In fact, since the mid-1990s, based on a concerted strategy developed by the McKinsey consulting firm, the insurance industry has developed and implemented an aggressive "three Ds" approach to avoid paying claims - deny... delay... and defend.

First, they almost automatically deny the claim. Second, they do anything possible to delay negotiations. Then third, they vigorously defend against any legal action.

The Insurance Industry's Background

Legal practice experience and information obtained from insurance agents and adjusters make it clear that there's at least some truth in the books and movies that claim there is a "Chapter X" in the insurance claims manual that teaches adjusters how to deny claims.

Although these books and movies are fictional and produced for entertainment purposes, and many legal practitioners have never heard of or experienced a written "Chapter X" for claims denials, it is apparent that insurance companies have "unwritten" guidelines for adjusters to follow.

This is not a conspiracy theory. Rather, it is a reasonable explanation of how an insurance agent makes money, and how an adjuster earns his raises, promotions, and pats on the back for saving the company money. In other words, these individual agents and adjusters are simply trying to look out for themselves.

Everyone does that to a certain extent. The problem with agents and adjusters doing it is they are cheating and breaking the laws that regulate claims handling procedures.

Tactics

Here is a short list of the tactics most often employed by insurance agents and adjusters to bend things in their direction in an insurance claim.

o Forgery - Your signature or initials are actually forged on papers you would have signed in the application process. In Texas, when a person purchases auto insurance, the law requires that the insurance company furnish the person with uninsured/underinsured motorist (UM) benefits. This coverage provides benefits for situations where the insured person (you) have an accident where the other driver is uninsured or the other driver does not have enough insurance to cover the damages. The insurance company is also required by law to provide Personal Injury Protection (PIP) benefits, which is coverage for medical bills and lost wages. A person who purchases auto insurance in Texas automatically has these two coverages unless the person purchasing the insurance rejects them in writing.

What typically happens is the agent has the person sign the application for insurance but forgets to have the person sign the "rejection of UM and PIP" coverage. Later, when that person is involved in an accident and makes a claim for these benefits, the agent discovers there is a signature on the application but the "rejection" was not signed. So, the agent forges the signature or cuts and pastes with a copier to transpose the application signatures onto the rejection forms.

o 515 Exclusion - Another example in the auto insurance area occurs when a husband and wife buy insurance. The husband might have a previous DWI conviction or too many tickets so that, if he is on the policy with his wife, the rates go too high for them to be able to afford the coverage. So, they purchase the insurance under the wife's name only and sign what is called a "515 exclusion," which provides that if anything happens while the husband is driving the car, there is no insurance coverage.

Some agents will have the "515 exclusion" signed, but avoid putting a name on the form indicating who is excluded. Later, if a claim is made, if the driver is someone other than the named insured, (in this example, the wife) the agent will complete the 515 form with that person's name, saving the company from having to pay any money on the claim.

o Fill-in-the-Blank - An agent helping you prepare an application for auto, homeowners, life, health, or commercial insurance will ask a lot of questions, write your answers on the application form, and then put the form in front of you for signature. What is not obvious is that the agent knows how each of the questions needs to be answered for you to be qualified for coverage. If you answered the agent's question in a way that would have resulted in coverage being rejected, the agent likely ignored what you said and answered in a way that results in coverage being extended. The agent is motivated to complete the sale and earn the commission. The agent also knows that the statistical odds are heavily against a claim being made. However, if you do later file a claim, the agent and the insurance company have created for themselves the option to accuse you of fraud and lying on the application you signed, and using this as grounds for denying your claim.

o Improper Denial - Many policies include paragraphs and clauses that are not legal or legally enforceable. But the general public, including you, typically is not aware of this subterfuge. So if you make a claim, the insurance company will reply to you with a letter citing one or more of the improper clauses or paragraphs as the basis or reason for denying your claim.

Delay

As indicated earlier, what is seen most often from insurance companies is delaying tactics. The purpose of this is to frustrate you into giving up, dropping the claim or accepting less in compensation than you should accept just to get it over with. In other words, they intend to "wear you out."

This is accomplished in several ways. They usually start out with a pleasant manner, although some choose actual rudeness. It starts with the first call. Whether the tone is pleasant or bothered, you have to look past their words and see what happens.

You can expect to see some or all of the more obvious ways of frustrating you.

o Putting you on hold for a long time - they will deliberately do this in hopes you will hang up.

o Your calls to them will only get voice mails, and no immediate return call.

o Transferring your file to different adjusters.

o Giving you incorrect claim number information. Later, when the number you are using does not connect with your case, they can imply you wrote down the wrong claim number.

This will be followed by the less obvious tactics, the ones that make it seem they are trying to get your situation handled but, guess what, not really.

o Mail Dodgeball - You may asked to mail a document of some sort, usually a bill, to substantiate part of the claim. After you mail it and have not heard anything back, when you call they say they have not received it (they really did). You resend the document. Then they ask for another document. Replay previous.

o Never-ending Document Requests - Then, days or weeks later, they ask for another document. After you make sure they've received it, they say "thank you for sending that, now we need..." a form filled out, a report taken, a statement, to talk with a witness, or doctor, or appraiser. More time goes by. Next they ask for a copy of your tax return. (This is illegal 95% of the time). While all of this is going on you are, 1) inconvenienced, 2) dealing with your job, 3) dealing with your family life, and 4) dealing with the loss which is the reason you are making the claim in the first place.

o Unnecessary Time and Expenses - You are spending time on the phone and doing the things the insurance adjuster has requested, spending money on postage, sometimes including certified mail, and spending time and effort obtaining records and copies. Needless to say, you are getting sick and tired of this process. Worse, you know you are being screwed around with, but you do not want to take the time or spend the money to talk with an attorney about this for fear of driving up the total costs involved. So, you give up. When you give up, the insurance company has won.

The Basic Principle

You will be well-served to remember this basic principle: The business of insurance is a bet. Insurance is nothing more than a large company with a larger balance sheet playing the odds against you...on your health, risk of an accident, storm damage, theft, death or other potentially catastrophic loss. Insurance companies educate themselves in extreme detail on the odds of actually having to pay on a claim. From this data, they can calculate how much they can charge you based on the eventually that some claims will be made, and still make a profit.

When they pay a claim, they have lost their bet. They do not like losing their bet. It all boils down to money. They don't want to lose their bet on insurance!

There are laws regulating how insurance companies handle claims. The Humphreys Law Firm is familiar with these laws and handle these types of situations against insurance companies on a daily basis. It costs nothing to talk to with them and in most cases payment of fees waits until the case is resolved and the insurance company is required to pay legal fees or reimburse you for anything paid up front.

How to Beat The Insurance Company Strategy

There are ways to beat the 3-Ds strategy and all of its tactics and permutations. When your claim is denied or if you're being stonewalled... here are 5 things to do immediately:

1. Document everything. Write down the details of conversations, keep letters from the company, copies of forms you've filled out. All with the dates and the names of people you spoke with.

2. Recall the details. Think back to the start of the claim - an accident, property damage, death, injury...whatever the cause of your loss. Write down all the information about it that you can remember.

3. Get all the official records...your policy, reports, statements, forms, explanations of benefits. Make copies if necessary.

4. Continue doing what's needed to repair the damage. If you're supposed to be getting medical treatment or repairs on a car or property, continue doing so.

5. Contact an insurance attorney. Actually, this should be the first step you take, and he'll tell you to do the other four. Listen to what he says and follow his instructions.

Regardless how large or strong your opponent is, you can win with this proof...and with an experienced insurance lawyer who is willing to fight it out.

Tom Sommers is president of Target Internet Marketing, http://www.TargetInternetMarketing.com Information about how to reverse insurance company claim denials and a copy of a booklet on the "First 5 Things To Do" is available at http://www.TexasInsuranceFighter.com

Unfair Claims Practices - Has Your Insurance Company Or Adjuster Handled Your Claim Unlawfully?

Unfair Claims Practices

Insurance companies refused to settle thousands of claims after Hurricanes Katrina and Rita and showed America just what Unfair Claims Practices can look like. But Unfair Claims Practices happen in more than just hurricanes losses. Insurance companies deny and delay claims on a very regular basis.

What do you do when your insurance company drags its feet and will not settle your claim? How do you tell what actions are just simply annoyingly poor customer service, and what actions violate the law?

How do you know if your insurance company is treating you fairly and lawfully after you have filed an insurance claim?

Every state has Unfair Claims Practices regulations to protect policyholders and claimants from being abused by insurance companies in the claims process.

A state regulator's primary task is protecting the interests of insurance consumers. Check with your state's Department of Insurance to find out the regulations in your state.

Let me give you some examples of Unfair Claims Practices:

* Attempting to settle a claim based on an application which the company changed without the insured's knowledge or permission. The simplest example of this is when an insurance company changes the date of the application. But it could be any information on the application that might be altered.

* Failing to act promptly after receiving information concerning an insurance claim. Many states require response within 15 days. When there's a storm like Katrina, you might have to wait weeks to meet your adjuster. But that might be an Unfair Claims Practice.

* Delaying a claim investigation by requiring unnecessary reports or documents which contain substantially the same information. Recently I witnessed a major well-known insurance company send a claim to their Special Investigations Unit (SUI), and then take recorded statements from the insureds...and then ask the insureds to submit to an Examination Under Oath. In my opinion, that was Unfair Claims Practice perpetrated by that insurance company.

* When applicable, failing to pay a claim quickly, fairly and equitably. Unethical insurance companies could just stonewall you by telling you it is still investigating your claim.

* Failing to promptly settle claims where liability is reasonably clear under one portion of the policy to influence settlements under any portion of the insurance policy coverage. For example, your auto insurer can't refuse to pay your bills under the medical coverage in your policy so you'll settle your uninsured motorist claim.

* Failing to promptly and clearly explain the policy or the law for either denying a claim or offering a compromise settlement. If you get a denial letter for your claim, the letter should quote the policy language directly that applies. No quote, could be Unfair Claim Practice.

* Attempting to persuade insureds not to invoke and use the arbitration process. Also, an insurance company is prevented from appealing almost all of the arbitration awards in favor of policyholders as a way to force a settlement of claims.

* Misrepresenting significant facts or insurance policy provisions. Insurance companies sometimes deny claims on their misinterpretation of the policy. Then, it's up to you to change their minds.

* Refusing to tell an insured what is happening with a loss within a reasonable time after receiving a completed proof of loss statement. Many policies require the insurance company to accept or deny the proof of loss within 30 days after receiving it. It's in your policy...read it.

* Denying claims without a reasonable loss investigation. The problem comes with the definition of "reasonable." Still, insurers sometimes try to settle a claim using a "lowball settlement offer" without much investigation, just to see if they can make the claim go away.

* Offering very low settlements to encourage insureds to sue. That would cause the length of time for a claim settlement to stretch out, possibly for years. The only ones who benefit from that delay are the insurance company...and the attorneys

* Settling claims for less than the amounts a reasonable person would expect. Insurance companies regularly make "lowball offers" for settlements to their own policyholders as well as third-party claimants. The insurers will pay the LEAST amount of money in a settlement that the policyholders or claimants will accept...always. That's one way to maximize profits.

If you think that your insurance company examiner or adjuster is has committed an Unfair Claims Practices action, talk to that person's supervisor. If the situation doesn't improve or get entirely resolved, file a complaint with your state's insurance department.

Now, I'd like to offer you two special reports at no cost. One is "5 Things To Do When Shopping For Car Insurance," and the other is "5 Things To Avoid When Shopping For Car Insurance." Each one is a $9.95 value, but free to you when you sign up for my newsletter at the website address below.

P.S. WARNING!! Do Not Buy Insurance, or Submit an Insurance Claim Without Visiting This Website!

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What Do to When Your Insurance Company Denies Your Claim

A determination by your insurance company that you are not covered is not the final word, but only the beginning of a process for you to obtain the insurance coverage which you purchased. Upon further investigation, facts may come to light which may cause the insurance company to re-evaluate its position and provide coverage.

Also, if suit is necessary, the courts may find that you are covered by your insurance policy when your insurer says you are not covered.

The realities of insurance

Whether you are a business that purchased a commercial general liability insurance policy or an individual who purchases a homeowner's policy or a life insurance policy, "peace of mind" was probably a big selling point made by the selling insurance agent. In return for payment of money to the insurance company today, the insurance provider promises that it will be there for you in the future should you suffer a loss.

Unfortunately, many find that after having consistently paid their premiums, an insurance provider denies their claim when they call upon their insurance company for the coverage promised in the insurance policy. In many cases, the one who determines and advises you that your insurance policy does not provide coverage is not an attorney, but a claims adjuster without knowledge of Louisiana insurance law.

Should your insurance company deny you coverage, you should seek the advice of an attorney familiar with the interpretation of insurance policy language.

When doing so, you are obtaining the opinion of a person trained in insurance law and not employed by the insurance company. If your attorney's opinion is that you are entitled to coverage, the denial of your claim is the beginning of your claim's process, not the end.

Why insurers and the insured always seem to be at odds

As an insurance company is a business, and a goal of a business is to make a profit, it is understandable that an insurance company has a bias towards denying insurance coverage. However, this bias may not be the only reason for an insurance company denying coverage to its insured.

At the time that you prepare and submit your claim to your insurance company, you may not know all of the facts and the insurance adjuster may not know all of the facts particular to your situation. In this situation, an attorney can review the insurance provisions, discover the relevant facts that trigger coverage and transmit these facts to the insurance adjuster for a re-determination of coverage.

When problems with claims persist

If the adjuster continues to deny coverage in the face of the newly presented facts, your attorney will be able to further pursue and protect your interests by filing suit against the insurance company. In this suit, your attorney will ask the court to declare that you have coverage under your policy.

In some situations it is not the lack of knowledge of certain facts which cause the insurance adjuster to deny coverage, but the policy language as the policy language relevant to your claim may have acquired a legal meaning which is not apparent to the layman or the insurance adjuster upon reading of the policy. Again, your attorney will be able to explain to the insurance adjuster the legal meaning and ramifications of the policy language and how that meaning entitles you to coverage.

Should the adjuster continue to deny coverage in the face of such law, your attorney will be able to further pursue your interest by filing suit against the insurance company asking the court to determine that you are covered by your policy.

The above situations may be best explained by real life examples:

Family #1 - Accidental Death Claim

In a claim for accidental life insurance policy proceeds, an insurance company denied the claims of a parent for the death of their child, when that child died after losing control of a car he was driving. Scientific examination of blood samples showed trace amounts of a prescriptive medicine, a medicine which was not prescribed to the child.

The insurance company denied the claim upon the basis that the child was under the influence of a controlled substance, and coverage for such was excluded by the policy. The parents hired an attorney who reviewed the policy, reviewed the chemical analysis and obtained information from a forensic pathologist about the chemical analysis. The attorney's efforts proved that the amount of the controlled substance that appeared in the chemical analysis was the minimum amount which could be registered by the test, and that a test reading of this amount could mean that there was none of the controlled substance in the child's bloodstream.

End result -

Upon being presented with this information, the insurance company reversed its position, provided coverage, and paid the full amount of the accidental life insurance proceeds to the parents. This is an example where facts relevant to coverage where not apparent to the policy holder and the adjuster. An experienced attorney was required to discover the relevant facts and present them to the insurance company.

Family #2 - Life Insurance Disputes

In another situation, an insured was delivered an insurance policy while in the hospital. The insured was diagnosed with a terminal illness during this hospital stay and died soon after. The insurance company denied coverage claiming that the insured knew of the presence of this disease prior to delivery of the life insurance policy. The insured's surviving spouse obtained the services of an attorney and suit was filed.

End result-

This attorney conducted a thorough and exhaustive research of the deceased's medical records. This attorney discovered that the only evidence of the deceased having knowledge of a terminal illness occurred within one day after the life insurance policy was delivered. The attorney presented this information to the insurance company and the insurance company settled the law suit by paying benefits to the surviving spouse.

Business Scenario - Lawsuit protection

In another situation, a commercial business was sued for libel and slander. That commercial business had purchased a comprehensive general liability policy which provided coverage for attorney's fees and court costs in defending this claim. The insurer refused to provide coverage.

The business hired an attorney to defend the business in the libel and slander suit. That same attorney then sued the insurance company for reimbursement of the insured's attorney's fees and court costs incurred in defense of the libel and slander suit.

End result-

The result of this suit was that the court found that the insurance policy sold to the business provided coverage for a cost of defense and that the insurance company owed reimbursement to the business for the attorney's fees and costs it incurred in defending the suit. Interestingly, the insurance company owed this "cost of defense" whether the business won or lost the libel and slander suit filed against it.

There are many more examples in the law books where an insurance company denied insurance coverage to its insured, only to later be found by the courts to have provided coverage to its insured. Each case is different, and each case must be carefully examined.

Just because your insurance company tells you that you are not covered does not mean that is the final verdict. When this occurs, you should seek the services of an experienced insurance attorney who is well versed in insurance law to examine your policy and the facts of your particular case as you may end up having coverage when all is said and done. The New Orleans law firm of Greenberg and LaPeyronnie can help in such cases.