Wrongful Denial of Insurance Claims
When you buy an insurance policy and pay the premiums, you expect the policy to offer you protection against financial losses in the event of an accident or a theft.
That’s the whole idea of insurance.
However, getting an insurance company to pay the contracted benefit isn’t always simple. Insurance companies want to make profits, and they do that by minimizing the amount of money they pay out in claims. Sometimes that means they’re aggressive in finding reasons to deny claims — and sometimes the denials are wrongful.
What many people don’t realize is that you don’t have to simply accept it when an insurance company refuses to pay your claim. If you’re fighting with an insurance company over a claim, an insurance dispute attorney may be able to help. An attorney with experience working with insurance claims can help you through the process of appealing your denial or gathering the documents and evidence you need to support your claim. An attorney can negotiate a settlement, or file a lawsuit on your behalf if it turns out the insurance company acted in bad faith.
Common Types of Denials
These are some of the most common types of insurance denials we encounter in Chicago. Many can be overcome by pulling together the right documentation and evidence, but it definitely helps to have an attorney fighting to preserve your rights and get you the compensation you deserve.
- Life Insurance Claims — The insurance company may refuse to pay death benefits to the beneficiary of a life insurance policy. The company may claim that the policyholder’s manner of death wasn’t covered or that the person making the claim isn’t a proper beneficiary. Alternatively, the company may claim that the policyholder made a significant misrepresentation about himself or herself that invalidates the entire policy and then refuse to provide the benefit.
- Auto Theft Claims — A common scenario in Illinois is for insurance companies to deny claims for stolen vehicles when they say there’s no evidence of forcible entry or tampering with the ignition. The company might deny a claim on these grounds even when the rest of the car has been stripped of parts and rendered undriveable.
- Bodily Injury Claims — Insurance companies often will fight bodily injury claims from auto accidents by attempting to claim that you weren’t really hurt, or that your injuries weren’t caused by the accident.
- Property Insurance Claims — If you have personal property that is stolen or damaged, you may try to make a claim against your homeowners or renters insurance policy. Your insurance company may dispute the value of your property or try to deny that you even owned the property. If you don’t have photos, receipts, or other documentation of the value of your property, you may not recover the loss.
- Disability Insurance Claims — If you’re injured and unable to work, you may try to make a claim against your short-term or long-term disability insurance. Insurance companies often look for any detail that allows them to deny a disability claim. They may question whether your disability is real or whether your injury is serious enough to prevent you from working, or that they didn’t get proper documentation of your disability, or that your disability isn’t covered under the policy.
Common Reasons for Denial
There are some legitimate reasons why an insurance company might deny a claim. However, insurance companies often will push these to the limits and look for any reason — no matter how small — to try to justify a denial. Some reasons you might have been given for denial of your claim include:
- Disputed Facts — The insurance company might claim that the accident or theft didn’t happen, didn’t happen the way you claim, or wasn’t actually the cause of your claimed loss or damages.
- Disputed Coverage — The insurance company may say that the type of loss you experienced falls into one of the policy exclusions that mean coverage doesn’t apply.
- Expired Policy — If you didn’t pay your premiums, the insurance company may say you didn’t have coverage at the time of your claimed loss or damages.
- Failure to Notify — If you don’t give the insurance company timely notice of your claim, it may be denied on the grounds that the insurer had insufficient opportunity to investigate the loss.
Bad Faith Actions
Insurance companies have an obligation to deal with you honestly and fairly, or in legal terms they have to act in good faith. When they act in a way that’s dishonest or violates your contract with them, you may have a claim for bad faith under 215 ILCS 5/154.6. Some common actions by insurance companies that might result in a bad faith claim include:
- Wrongful Denial — When an insurance company doesn’t have a legitimate basis to deny your claim, misrepresents the policy terms or coverage, or refused to settle even when liability or coverage was clear, that may be bad faith.
- Delaying Investigation or Failing to Investigate — The insurance company has a duty to perform a reasonable investigation to determine if you have a legitimate claim. If they fail to do that, or drag their feet, that may constitute bad faith.
- Delaying Processing or Payment — If the insurance company intentionally puts off processing your claim or paying you the benefit to which you are entitled, that may be bad faith.
- Failing to Pay the Full Benefit — When the company deliberately pays you less than a reasonable person would think the claim is worth, that may be bad faith.
If you are wondering about your rights because of a wrongful denial situation with an insurance company, contact Chicago personal injury lawyer Jared Staver for a free consultation: (312) 236-2900.