All You Need to Know About Insurance Claim Disputes
Insurance disputes can be challenging. Not only have you just experienced a difficult event, such as a car accident, home disruption, or accident at work, but you now have to file a dispute with your insurance company and ensure you receive the amount you're entitled to.
While everything should go as expected when you file an insurance claim, smooth sailing is not a guarantee – at least, not right away. The reality is that insurance companies deny claims for many reasons and sometimes they remain obscure. Once you file an insurance claim, you might experience a denial or a delay in payout, even if your insurance claim is legitimate.
When this happens, your best pathway forward is to work with the insurance company, understand your insurance coverage, and hire a lawyer to navigate the complex legal landscape so you can reach a fair settlement. This could be in the form of home insurance claim settlement, worker's settlement, and more.
Let's go through more information and details on insurance claims and what to do in the case of a dispute.
What Is an Insurance Claim Dispute?
An insurance claim dispute happens when a policyholder and the insurance company cannot agree on a settlement. The disagreement could arise as a result of the insurance company refusing to pay a settlement, offering to pay less than what the policyholder claims, or delaying payment without an explanation.
Such a dispute could happen despite the type of insurance you have. You might need to file a dispute with health, life, dental, workers' compensation, car, homeowners' insurance, and more.
Reasons You Could Have an Insurance Claim Dispute
There are a variety of reasons you could experience an insurance dispute with your homeowners' insurance policy provider, health insurance company, auto insurance company, or another type of insurer
In general, some of the most common types of insurance disputes are:
- Bad faith disputes, which happen as a result of a poor investigation from the insurance company
- Health insurance disputes that arise as a result of the company announcing a lapse in coverage or that your injury or health issue is not covered by the policy you hold
- Disputes that come from an adjuster who determines that any losses, such as from a car accident, are not covered by your auto insurance policy
- A worker's insurance dispute where the employer declares to insurance companies that the worker caused the accident or that the worker had a pre-existing health condition
- A home insurance provider denying payment because they state that an accident, such as a fire, was caused by the individuals living in the home
What Happens if You Have an Insurance Claim Dispute?
When you file an insurance claim, your insurance company has three options:
- They can pay the amount you request as part of your insurance policies and coverage.
- They can refuse any claim payments, and you will have trouble settling.
- They can offer to pay a lower amount of money, also known as a low settlement offer.
The last two scenarios result in a claim dispute. In these cases, you'll need an attorney to help you take legal action and seek a better settlement.
In case of a dispute, you might have to initially pay health care expenses out-of-pocket, resulting in a heavy financial burden to you. Some cases, especially in health insurance disputes, result in the insured person going bankrupt.
Insurance disputes between the insurer and the policyholder do happen, even when the policyholder does everything right. Additionally, reaching a resolution can take a long time.
When you think you may have to deal with an insurance dispute, consider talking to an attorney to find out what your options are. It's also a good idea to understand what steps you can take to make sure your insurer pays your claim.
What to Do if You Have an Insurance Claim Dispute
It's essential to take a few steps when you file a claim to protect yourself in the event of a dispute. In case of an accident or health problem, you should make sure you take notes about what happened and take as many pictures as possible.
Talk to any potential witnesses or anyone essential to your case, and gather any necessary evidence. All these efforts will help you prove your claim, and the more proof you have, the less likely you are to have a dispute in the first place.
Immediately after your accident, file your claim with the insurance provider. Include all the facts related to the event and proof of any damages you incurred, such as medical bills for treatment.
You should also keep all evidence of what is happening with the insurance company. Make notes of who you are talking to, keep track of statements, and take pictures, if necessary, so you can document every detail of your contact with your insurance company. This documentation will help you protect yourself during the dispute.
An insurance company is bound by law to act in good faith. Good faith means acting with fairness and honesty. For example, a provider can't deny a claim to save money.
If you can prove the insurance company is not acting fairly and honestly, you have a bad faith dispute on your hand. You can then file a bad faith claim with an attorney for all damages and seek compensation for your initial claim, as well as other interest and penalties you incurred thereafter.
Steps to Resolve an Insurance Claim Dispute
Some insurance companies will do anything within their means to deny your claim and withhold payment or delay it as much as possible. They might introduce independent appraisal processes or go through different steps for validation purposes to deny paying you any money.
So if you find yourself expecting an insurance claim dispute, here are the steps you can take to get the payment you deserve and any additional compensation you are entitled to receive.
Step 1: Understand Your Coverage
The first step to resolving a dispute is for you to understand the type of coverage you purchased. Review all documents you have in detail, paying close attention to the small print. You will uncover valuable information that will help you understand your insurer's point of view and the reasons they might be denying or delaying your payment.
In case you find out that you are being treated in bad faith, reviewing your insurance policy coverage will give you the necessary information you need. This will help you put up a fair fight and demand payment from your insurer based on reasonable evidence.
Step 2: Ask for Clarification
Once you have a thorough understanding of what your coverage includes and how you can resolve a dispute, talk to a claims adjuster or insurance writer and explain why you believe you're entitled to compensation.
Make your case in a logical manner with proper arguments based on the current laws and your policyholder's agreement.
Make sure you understand everything that the insurance company is telling you. If they use confusing language or terms that you do not understand, ask for further clarification. Get the company's perspective on why your claim was denied and make notes of these reasons.
Once you have talked to your insurance company, send an additional letter or email summarizing the points of discussion and your arguments for validation purposes and your contact information.
If even after you've had multiple discussions, you realize that the circumstances are left unchanged, you can seek the help of the Office of Insurance Regulation and file a complaint. This office is the main review body, and they can investigate the company to find proof of bad faith behavior.
Step 3: Review Your Initial Claim
If the Office of Insurance Regulation fails to help you out, go back to the claim you initially filed and review it. Consider whether you have made any mistakes or failed to provide the necessary proof.
Determine whether you should include more photos, witness accounts, videos, receipts, or other materials that could help your case. Also, by now, you should have received an estimate from the insurance company's adjuster. This is the amount of compensation you should be entitled to if your case moves forward.
Submit a re-reviewed claim with additional documents and communicate with your insurance company to see whether the evidence you submitted will have an impact.
Step 4: Get an Independent Damage Estimate
If you have taken all the opportunities to speak with your insurance company and you haven't gotten any results, it's time to take matters into your own hands. Your next step is to hire an independent damage estimator. A public insurance adjuster could cost $200 to $500 to hire, but they can help your case.
With an independent appraisal detailing how much compensation you are entitled to, you have a new argument that opposes your insurance company's estimation. This will help you prove that they have been trying to avoid compensating you or trying to give you less money than what you're entitled to.
An example could be that you are owed more by your homeowners' insurance policy than what the company said during their estimation. If the independent estimator finds that you are entitled to more compensation, you can take the case further.
On the other hand, the estimator could also simply reiterate the stance of your insurance company. If this is the case, you might decide to drop the case altogether.
Step 5: Contact Your State's Department of Insurance
Your next step is to contact your State Insurance Department. They can provide free advice and resources and inform you about your options. A State Insurance Department could even offer free investigative or mediation services that you can use.
Step 6: Hire an Attorney and File a Complaint
Finally, if you cannot reach an agreement with your insurance company, you can seek legal help by hiring an attorney. A lawyer will help you find additional proof and understand how you can go about winning the compensation you deserve.
During an initial consultation, attorneys will evaluate whether you have a case or not. If yes, they will take care of the rest.
Hiring an attorney may entail more effort on your part, and you might incur additional expenses, but if you win the case, the insurance company might have to cover all costs, including those you had to pay to go through the process.
Insurance Claim Disputes for Natural Disasters
In the case of a natural disaster, you have to go through the same process for filing a claim and getting compensation. But, keep in mind that you might experience delays because there will be a huge wave of claims from everyone impacted by the disaster.
In these types of situations, insurance companies will usually designate all cases to a dedicated claims manager. Additionally, state Insurance Departments usually set a date for the company to acknowledge all claims, which is usually within 15 days.
If you anticipate an insurance claim dispute and think that your insurance company might act in bad faith, you should seek help from an attorney.
With Schwartz Law Firm, you will get professional, personalized service from attorneys with more than 20 years of experience. Contact an attorney today for a free consultation and get the results you deserve.