"I chose to go to law school because I thought that someday, somehow I'd make a difference." -A.

August 3, 2017

Resolving Insurance Disputes

Insurance companies have a reputation, arguably deservedly so, for being reluctant to pay out on policies and creating and exploiting loopholes to avoid paying out on legitimate claims. When an insurer acts in this way, they are said to be acting in bad faith and the policy holder may choose to take them to court if they believe they have a strong case. The insurance industry is one of the most heavily regulated in the United States, and while regulations will vary between states there are some aspects of resolving disputes with insurers that are universal. Every state will have a law with a name such as ‘Unfair Insurance Practices Act’ (UIPA) or ‘Unfair Claims Settlement Practices Act’ (UCSPA), searching online for similar terms and the name of your state should return the exact legislation in the search results.

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Regulations
The majority of states adhere to the following regulations. However, before pursuing a claim yourself or on behalf of a client you should check the exact wording of your state’s legislation.

  • Insurers are forbidden from misrepresenting the policy they sell a client, and if they mislead the client as to the terms and conditions of the policy it becomes invalid. Similarly, insurers cannot alter the policy that has been signed without informing the policy holder ahead of time. Your right to cancel and/or be refunded on this basis will vary from state to state.
  • An insurer is forbidden from withholding payment relating to one area of your policy in order to try and force a settlement of a dispute in another area. For example, if the client has a dispute with their insurer regarding property damage, and then is involved in a vehicle collision, the insurer cannot use the property dispute to avoid paying out on the collision.
  • Insurers have a legal obligation to acknowledge and investigate any claims promptly. Some states set a definite limit on this, requiring the insurer to respond within a certain number of days of receiving the claim, others have more vague legislation, but all states require that insurers do not defer claims in an effort to avoid or delay payment.


Settling
It is always preferable to avoid drawn out court cases and, if possible, it is in the clients’ interests to resolve any insurance disputes outside the courtroom. You should first send a letter to the insurer on behalf of the client laying out exactly why you and they think they are entitled to a pay-out on their claim. If the client has suffered an injury you should also put them in touch with a personal injury attorney; this may strengthen your case should it end up in court.

Going to Court
If you believe the client has a strong enough case and you are unable to overcome the insurance company’s intransigence, then your final option is to take them to court. If the claim is for a small amount of money (the exact amount will vary between states), then they may be best off going to the small claims court and are generally able to do this without an attorney. For larger sums, however, you will want to review all the relevant legislation and prepare to argue their case extensively.

Assisting clients in settling disputes with insurers can make a huge difference to their lives and circumstances. Individuals and families are sometimes bankrupted by the effects of an insurer refusing to pay out. Helping them to obtain justice and a fair pay-out on their policy can make a huge difference to their future quality of life.

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