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 Humphrey Family Law!
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.