Through our Kentucky and Indiana law practice we deal with client questions on a daily basis concerning denial of insurance claims. Insurance companies are in the business of making money and have been very successful by acting in bad faith. However despite record profits, insurance companies still employ unethical tactics and tricks in order to continue to increase their profit at the expense of their insureds. The American Association for Justice has issued their latest research report titled
Tricks of the Trade: How Insurance Companies Delay, Deny, Confuse and Refuse. Included are several stories of real people who were victims of illness or accident and then became victims again by their insurance companies. It is important to be aware of the common tactics and tricks your insurance company may use before dealing with them. Below are two of the common tactics listed in the report.
Denying Claims
One tactic of large insurance companies is to deny valid claims in an effort to boost profits. Many of the largest insurance companies have created employee incentive plans to reward employees who deny claims successfully and replace employees who do not. Just a few examples listed in the report include insurance giant Farmers' incentive program "Quest for Gold" which offered its employees incentives for meeting low payment goals including $25 gift certificates and pizza parties. Allstate also used incentives such as portable fridges to reward employees for denying valid claims. Allstate also used what they referred to as a "boxing gloves" approach when dealing with policyholders who would not accept lowball offers on their claims.
Delaying Claims Another way for insurance companies to avoid payment is to simply delay the claim for as long as possible. Insurance companies know that by delaying claims, many claimants will eventually give up or even die, therefore possibly avoiding any payment at all. For most policyholders asserting a claim, is a very vulnerable time in their life either due to an illness or accident. Insurance companies realize that claimants do not always have the time or energy to continue resubmitting claims and required documents and to continue calling the insurance company to see if their claim has been approved. The report lists tactics admitted by long-term care insurer Conseco and its subsidiaries that included: mailing the wrong forms to claimants and then denying their claims due to having the incorrect paperwork, declaring claims abandoned by policyholders if certain paperwork was not submitted within 21 days, and requiring documents that were not even required under the insurance policies before payment would be issued.
Prepare yourself for these tricks by following some basic guidelines:
Read your policy -- you need to be aware of who is covered under your policy, what is covered and how to appeal if the insurance company denies your claim.
Know what you are filling out and what you are signing -- be very careful in filling out forms, answer the questions correctly and understand what you are signing and agreeing to. Do not simply trust the insurance agent to explain the documents to you, read it.
Do not Cash a Premium Refund Check -- insurance companies sometimes send these checks if they decide to rescind your insurance. This check would cover the premiums you paid, however if you cash this check, it may be interpreted as your acceptance of this decision, leaving you uncovered.
Keep records of all conversations and get everything you can in writing -- this will not only help you keep track of what has been said while dealing with an insurance company but will also be beneficial should your claim not get resolved prior to litigation.
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