Filing a policy claim with your insurance company can be a difficult and intimidating process. Many people feel pressured and helpless when a massive insurance corporation refuses to pay on a policy, and think there is no way they can argue against them. But insurance company's must obey the law like everyone else, so it is important to know your rights and how to force these companies to pay you the money you deserve.
My Insurance Company Recently Denied My Claim. What Do I Do?The first thing is, if they told you this over the phone, demand that they send you the denial, and detailed reasons as to why they refuse to pay, IN WRITING. It is important to try to get everything you can in writing, for two reasons: 1) In case of a lawsuit, detailed reports of your transactions will go a lot farther then your vague recollections of a conversation (that can be denied!), and 2) a company engaged in questionable practices (such as purposely denying a valid claim) will likely be more hesitant to document its actions. Asking for documentation may be enough to make them cave-in.
The next thing you should do is file for an immediate appeal or administrative hearing (with the company). While it is unlikely that the company will reverse its own decision, it is essential that you do this to comply with your own policy's requirements. Otherwise, if you end up suing the company, a judge may say "you didn't exhaust all your available remedies at the time" and throw your suit out.
My Appeal Was Turned Down.Well, this means that either the company is sticking to its guns in refusing to pay your valid claim, OR your claim is actually not valid! Remember to ensure your policy actually does cover the damage you are dealing with, as many people wrongfully assume that they are covered when they are not (for instance, many people mistakenly think that homeowner's insurance covers flood damage, only to be left out to dry when a flood ruins their home).
If you think your damage is covered, you should contact a lawyer immediately, as there may be a statute of limitations on your claim. Your lawyer can then discuss the likelihood of winning a lawsuit, and let you know about whatever state laws are in effect regarding your situation. Sometimes just a call from an insurance lawyer may scare an insurance company into paying up!
What Can I Sue For?There are two major categories of lawsuits against insurance companies: those for breach of contract, and those for acting in bad faith.
Contract Breach Lawsuits are much easier to prove, but also have less of a reward. All you must prove is that the terms of your policy were not followed by the company. This is helped also by the fact that most laws force ambiguous terms in a contract to be construed in favor of the policy holder. However, most states limit breach of contract damages only to the value of the actual contract, so that the court will only grant you, at best, the amount of money you should have received in the first place.
They can also sometimes grant you consequential damages (out of pocket expenses you incurred because of the insurance company failing to pay), and may allow attorney's fees as well. But many people might not find this worthwhile if the amount in dispute is not enough to warrant a court battle. If it is to claim a huge amount, such as a life insurance policy or the cost of your entire home, then this is certainly the way to go.
Bad Faith Lawsuits are where the real danger to insurance companies lie. This is because they allow for many more types of damages than simple contract breaches, including consequential, mental or emotional stress damages, and (if the companies conduct was really bad) punitive damages, which are designed to punish the company for wrong doing.
However, the standard of proof is also much higher, as you have to prove the company acted in "bad faith," (i.e. they are purposely trying to swindle you). A legitimate dispute or disagreement over coverage or benefits will likely not give rise to a bad faith claim. For punitive damages it is even harder, as the companies conduct must literally be "despicable" (an actual example being where an insurance adjuster denied a claim to a crippled man, then laughed at him as the man cried in front of his family).
But I Can't Afford to go Up Against a Huge Insurance Company in Court!The good news is, you don't have to. Most experienced insurance law attorneys work on a contingency, meaning that they will only take a percentage of your final settlement. This allows most law firms to review your case and commence a lawsuit without charging you any money at all. If you believe that your claim has been unfairly denied, or that the insurance company has acted unfairly in handling your claim, don't give up. Contact an attorney to assert your rights and pursue your claim. |
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