What Rights Do You Have if an Insurance Company Denies You
Even though you have been buying insurance for years, it is likely you have never suffered a considerable loss. Thus, you may have limited experience filing claims with insurance companies. Recovering damages for a legitimate claim depends upon awareness of insurance consumer rights and responsibilities. Often, accident victims are at the mercy of insurance company adjusters, who interpret the policy, evaluate the claim, and distribute the monetary compensation.
To help level the playing field, here are some important principles of insurance law that judges and legislators have fashioned over the years for your protection.
1. An insurance company must act in good faith in the investigation and payment of claims.
It is unlawful for an insurer to engage in unreasonable delay, to put their financial interests ahead of the financial interests of the policyholder, or to underpay claims. Any action contrary to this principle is a violation of the duty of good faith, which the law imposes on insurance companies.
2. If an insurance company violates their duty of good faith and you must sue in order to recover your loss(es), the insurance company may be responsible for your legal costs and attorney’s fees.
Often insurance companies will attempt to under-settle claims by arguing their offer is high enough and includes monies to pay legal fees. If you have hired a good lawyer, you will be guided through this tactic.
3. Any ambiguity in an insurance policy must be interpreted in your favor and against the insurance company.
It seems that insurance companies place value in writing the most incomprehensible and loophole-filled policies. They know the muddier the policy language, the better opportunity they have to under-pay claims. They write convoluted policies so they can get “coverage opinions” from their own law firms (to whom they pay hefty fees) to explain what they have written.
You can turn this confusion into an advantage by having your own lawyer show that an applicable provision is ambiguous and, of course, if it is, the claim must be paid.
4. The insurance company is obliged to provide the applicability of a “limitation” or “exclusion” in a policy.
Insurance policies typically include a short “insuring clause” describing what’s covered and dozens of paragraphs and thousands of words listing exclusions, exceptions, and limitations.
When a large claim occurs, insurance companies carefully review all exclusions and limitations in the policy to determine if there is an opportunity to deny coverage for the loss. Insurance companies are required to send a written letter fully explaining any denial of coverage. If you receive this letter make sure you have an attorney that understands how to interpret your policy coverage and exclusion language and apply the law to the facts of your claim.
5. Get legal advice from an insurance law expert so that you know your rights before you talk to the insurance company, not after… because at that point it may be too late.