Insurance Claim Denials - Six Tricks to Watch Out For

As an attorney representing consumers in cases of insurance bad faith, I see some of the same claim denial tricks over and over again, and they work every time, unless the policyholder recognizes the scam and calls the bluff. Here are just a few:

1. Misrepresenting coverage. The company knows people accept orders from those in authority without question, just like they stop at stop signs without thinking twice. If the insurance company denies your claim, don't just take their word for it. Read the insurance policy. What counts is what the policy says, not what the insurance company says. You would be amazed at how often the two do not match up. 2. Using ambiguous policy language to deny the claim. Let's say you look at the policy, and the answer isn't really clear. Well, there is no jump ball in the insurance coverage game, because the law has a fix for that. If the policy language is ambiguous, (meaning that it can be interpreted in different ways) the law says it MUST be interpreted in your favor. But guess what: the company almost always does just the opposite, unless you know the rule and call them on it.

3. Trial denials. Yes, there are companies out there that routinely deny valid claims, and if the policyholder challenges the denial, the company withdraws the denial and pays as if it was an oversight or mistake. Then, the company does the same thing over and over again. Since 4 out of 5 victims just go away quietly, the company keeps the money and makes a considerable profit. Look closely, and challenge when you need to! 4. Holding your money hostage. Another trick is to exert leverage by refusing payment for something that is clearly covered, unless you agree to sign a release giving away your right to something else. Most states have outlawed this practice, but it works so well that some companies still do it all the time. Don't put up with it.

5. Too quick to please. Insurance companies have statistics showing that if they can get you to settle quick and sign off on any further rights, it costs them less, mostly because things get overlooked. Over time, and over thousands of claims, lots of things get overlooked! This routine works well, because fast settlements look like good customer service. Sometimes it is. Just be aware, that's all.

6. The slow screw. On the flip side, if they can't get you to settle quick and cheap, slowing things way down is the next best way to get force the price down. State Farm used to have a Power Point presentation teaching claim handlers that “Money is Power. When you have the power, use it. When you don't, delay!” The strategy is to get you to lose patience and settle for less, so be patient. Studies show over and over again that in negotiations, the side that gets in a hurry almost always gets less.

These are just a few of the tricks used every day in the insurance claims business. But wait a minute… aren't there any honest claim handlers out there? You bet. In fact, most are, and it's unfair and counter-productive to approach any situation expecting dishonesty from anyone.

So don't go around EXPECTING to get scammed, just be ALERT for it. As the ever affable Ronald Reagan used to say, “trust, but verify!”Mike Abourezk is an bad faith insurance claim lawyer with the law firm of Abourezk Law. For more information about Mike Abourezk visit online today.

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