CLAIMS: YOUR OWN PROPERTY - GETTING PAID
insurance policies all contain requirements for reporting &
proving your loss. Some even include a specific number of days allowed.
If you fail to comply, your claim may be rejected, even if the policy
would otherwise pay. This is why it's so important to contact your
agent immediately, even if you do not yet have much information
to report. Once an adjuster is assigned, you'll be asked to provide
documents showing what was lost or damaged, how it happened, and
what it's worth. Then you'll be asked to sign a sworn statement,
referred to as a "Proof of Loss." Your objective
should be to comply with the policy requirements, and nothing
else. (Don't chat with the adjuster about anything. Don't offer
theories. Give him/her what is requested, volunteer nothing else.
Friendly chatting with claims adjusters is like talking to the IRS.
You can only lose.)
report must specify what caused your loss. Perils such as
fire, smoke, vandalism, theft, water damage (not flood), wind, other
accidental physical damage are common causes and, subject to individual
policy terms, not problematic. Reports listing property which merely
disappeared, deteriorated or was damaged due to age or overuse,
property damaged by insects or rodents, other nonspecific, non-accidental
descriptions lead to unpaid or heavily discounted claims. Violation
of protection requirements (Alarms, fire sprinklers, etc) or coinsurance
clauses can also void or impair your claim. Obvious & intentional
misrepresentations made on your original application for insurance
ordinarily void your policy. (If your candle shop also manufactures
some fireworks, there's a problem.) Discuss your loss fully with
your broker-agent before the initial report is made, and
prepare for anything that is considered a potential issue.
Fraud is a widespread and costly threat to insurers. (Estimates
run from $20-$60 billion.) They are beginning to employ advanced
and highly sophisticated defenses, everything from stress analysis
of recorded statements to predictive modeling, to widespread database
searches scanning for organized or repetitive criminal fraud. Claims
models are not unlike IRS models in selecting individual files for
a closer look, but probably much better.
whether you might be killing the insurance goose. If you have had
a string of claims over the past few years, and this one is smaller,
consider paying out of pocket. Carriers actually tend to regard
you as a problem more readily when you demonstrate "Frequency."
(clusters of claims.) There is a tipping point beyond which
you are almost certain to be non-renewed. You then become "distressed
business," and may find other insurance far more costly, more
limited, hard to find. Insurers can often be forgiving of single
claims, even large ones, as long as they don't indicate carelessness
or fudging on your part.
do have remedies when the carrier doesn't play fair. Your state
insurance department regulates admitted insurers & provides
a means for having your claim contested. There is no cost, and insurers
don't much enjoy documenting & explaining their behavior to
insurance regulators. Some states have very specific time parameters
for insurers to respond and/or pay, and penalties if they don't.
A filed complaint can work near-miraculous overnight changes when
the adjuster has been clearly unfair or non-responsive. If you are
still dissatisfied after the regulators, a good attorney with experience
in this specialty may be the best option. There are also public
adjusters who will, for a fee, prepare your proof and push it through
with the insurer. This may be a prudent method when your loss is
sizable and complicated.
CLAIMS: GETTING SUED - GETTING AN ATTORNEY
policies also have specific reporting requirements . If you
do not report a claim promptly, and the insurer considers your delay
to have impaired their settlement possibilities, they may deny coverage
& hand it back to you. There are also wide variations in reporting
requirements, i.e. some policies require you to report almost any
type of demand or occurrence likely to lead to a demand. Much depends
on the type of liability insurance. There is also a potent risk
in trying to handle small claims on your own. Unlike claims on your
own property, you have no effective control over the eventual size
of a liability claim. The claimant and his/her attorney decide that.
An incident which might initially seem to be no big deal can explode
into thousands. If you've not reported it, you could be left to
defend yourself. In so-called "Claims-made"
policy forms, the reporting requirements become even more onerous.
Small, property damage-only claims may be possibilities for settlement
outside the policy, but as a general rule it is never ever prudent
to attempt settling an injury claim alone.
you have been actually served with a lawsuit, the insurer should
immediately assign your case to an adjuster, who then would pass
the file along to legal counsel to answer on your behalf and prepare
your defense. (Some errors & omissions and other specialty types
of policies may allow you choice of your attorney, subject to certain
approval conditions.) With virtually no exceptions, liability insurance
policies provide you with legal representation. Some policies impose
a deductible, and some include the legal defense costs in the policy
insurer's initial response is to scrutinize the claim against you
to determine whether there is any basis whatsoever for denying you
coverage. This may seem sinister, but is actually dictated by the
legal system. Insurers have been punished mercilessly for participating
in a claim and later withdrawing. They have learned from dreadful
experience that even the slightest likelihood of a coverage issue
must be asserted at the very outset, or they legally forfeit any
right to it as a practical matter. If the adjuster considers the
claim against you to be outside the scope of the policy, you'll
receive a declaration citing the specific policy language and/or
other evidence which is thought to void your coverage. This does
not necessarily mean you won't still be defended. (See "Getting
a defense") If the insurer thinks their denial is bulletproof,
they may refuse outright to defend you, and you are then on your
own to obtain legal counsel.
can and should read the exclusions in your policy before reporting
a claim. Sure, policies are hard to read, but the section listing
the exclusions is usually pretty easy to find, and the actual exclusions
pretty plainly written. Have your agent send you a copy if you can't
find it. Your report should comply with the policy requirements
and nothing else. The adjuster will then ask for whatever
additional detail or documents are needed, and you are obliged by
the policy conditions to cooperate.
remedies when insurers improperly delay or refuse to cover your
liability claims are much the same as with the property category.
A complaint to state insurance regulators may change the insurer's
attitude. A letter from your own attorney refuting the adjuster's
denial can also spur change.