Insurance companies exist to soften the blow of an otherwise difficult or catastrophic situation. They provide a safety net in the form of monetary compensation if you or a loved one suffers a loss, accident, medical emergency, theft, or property damage.
You trust them to live up to their promise to be there for you when you need them the most. So, what happens when they don’t live up to their end of the agreement? It’s not the first time that we’ve come across heart-wrenching stories of insurance companies giving people a hard time when they need to honor a claim.
When this happens, it’s time to get an insurance lawyer involved. In this article, we explore all you need to know about insurance lawyers and what they can do to help protect your rights.
How Do Insurance Companies Make Money?
Insurance companies use a fairly straight forward business model. Ever heard the phrase, “lightning never strikes the same place twice”? That’s essentially how they operate.
It revolves around spreading risk. By distributing the adverse effects of a catastrophe among a group of people, the company can provide an affordable way to guarantee financial security. All an individual has to do is pay a small fee – a premium – every year. These premiums are then used to foot claims.
The sad reality is insurance companies make money when they pay out less in claims. The difference between what they pay out in claims and what they receive in premiums constitutes underwriting income.
This is what they invest to make them money. The premiums you pay are calculated based on the level of risk you pose to the company.
What Can an Insurance Lawyer Do for You?
When your claim is denied, the first step is to get in touch with the insurance company. Find out why they denied your claim. In some rare cases, it could have been a simple administrative error.
If this isn’t the case, review your policy document with a fine-tooth comb to see what is covered. If your assessment of the document reveals that they should honor your claim, you can initiate an appeal for them to look into it and reconsider their stance. If that fails, then you should file a complaint with the state insurance commissioner.
If that seems like a hassle, you can retain the services of an insurance lawyer who will help you seek legal recourse. They are well versed in handling such issues and are best placed to tell you if the insurance company lived up to their promise or if they indeed short-changed you.
They’ll review the facts and make an accurate assessment of whether your case will hold up in court. If they find that you have a justifiable claim, they’ll pursue the matter on your behalf.
What Is Bad Faith Insurance?
Imagine paying premiums to an insurance company for many years only to find that when the time comes for them to cash out on their policy, they either delay compensation or avoid it altogether. It can be quite frustrating, to say the least.
Going up against an insurance company can be daunting. But it is a necessary part of the process, especially if it seems like they’re jumping through hoops not to pay your claim.
In such instances, the insurance company is said to be acting in bad faith. The law requires that insurers act in good faith when it comes to settling claims. This means they’re supposed to assume that the sole purpose of your policy is to help reduce the financial burden of your issue.
Not turn you into an overnight millionaire. An insurance company is said to have acted in bad faith when they:
1. Deny Your Claim for No Valid Reason
If it looks like your insurer is trying to find reasons to deny a claim instead of using the same zeal to find a basis to pay it, they could be violating the law. If you’ve been a loyal customer who pays their premiums regularly and on time, they should process your claim quickly and efficiently.
2. Deny Your Claim for Fraudulent Reasons
If the company denies your claim for a reason that you know to be completely false, and as such, causes you physical and financial injury, you have grounds to file a lawsuit against them. Most people don’t realize that an insurance claim lawyer can help them with this.
3. Delay Paying out Your Claim
When you take out a policy, it stipulates the amount of time it would take to settle a claim. State laws also set limits to compel insurance companies to resolve claims within a specific period. If you’ve submitted all required documentation and still haven’t heard back from them, get an insurance attorney to help expedite the process.
4. They Terminated Your Policy
If you went to make a claim only to find that your policy was cut off without warning, that’s a definite red flag. It’s illegal for them to do that, and you need to get an attorney immediately.
5. They Send You to Speak to Their Attorney
If your insurer doesn’t notify you in writing the precise reason why a claim is being denied but instead sends you to their attorney “before they can pay it out” talk an independent lawyer first. They’re trying to get you to say something that might jeopardize your chances of receiving compensation.
Protect Your Claim
An experienced bad faith insurance lawyer can help you sue for damages far beyond policy limits. These include attorney fees, punitive damages, and emotional distress caused as a result of the insurer’s claim denial.
It might look like a big expense up front, but the good news is that some attorneys will only bill you once there’s a settlement. They prefer this arrangement when they find that they have a strong enough case. That way, you can get great representation without incurring debt in the process.
If you have more legal questions, you can also chat online with a Laws101.com attorney where you’ll be instantly connected to a lawyer who can give you legal guidance on your specific case or question.