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General Insurance Claims and Coverage Issues

Filing a claim with an insurance company can be frustrating or, even worse, economically devastating if your claim is denied and you have amassed enormous medical bills or property losses. Make sure you understand your rights as a policyholder and don't be afraid to fight back against the insurance company.

Dealing with the Insurance Company
Keeping a Record of Your Conversations
What to Do if Your Claim is Denied or Too Low
Unfair Settlements
Understanding Your Insurance Policy
Consulting a Lawyer

Dealing with the Insurance Company

The most important things to remember when filing a claim with an insurance company are:

  • Put it in writing.
  • Ask for it in writing.

Phone calls are great for quick contact or easy answers (such as asking if your claim was received or if your premiums are current), but you must always remember to put everything in writing. This includes not only the claim itself (generally a specific requirement under most policies), but also all contacts with the insurer.

Information to Record When Speaking with an Insurance Company

For every conversation with insurance company, be sure to keep a written record of:

  • The name of the person you spoke with,
  • The date of the conversation,
  • The time of the conversation, and
  • A specific explanation of what was said.

By documenting these conversations you are creating a paper trail. By documenting the story of your claim, you can ensure that the insurance company cannot subsequently change the story to fit their rationale for denying your claim. If someone is rude to you, make a note of that, too.

If necessary, consider sending a letter to the insurance company after each verbal contact confirming the substance of the conversation. Fax confirmations are helpful to prove receipt by the insurance company as are letters sent return receipt requested.

What to Do if Your Insurance Company Refuses Your Claim or Offers a Low or Unfair Settlement

If your insurance company fails to honor its contract and pay a valid claim:

  • You should contact an attorney with experience dealing with insurance companies. Many people believe that legal assistance is not necessary at the initial stages of an insurance dispute, but we believe that obtaining legal advice early in the process often leads to a better resolution for the policyholder.
  • Immediately review your insurance policy for information relating to claim or benefit denials and appeals and grievance procedures.
  • Check the policy to see if there is a time limit for appeals. Most often, there is a requirement that the policyholder appeal a denial in writing within a period as short as 15 to 60 days. Additionally, there are multiple levels of appeal or grievance which are mandatory and also entail short time limits.
  • You have the right to bring a civil action for damages against that insurance company.
  • In addition to suing for a breach of contract, in New York you may bring a General Business Law § 349 claim seeking civil damages and attorneys fees.
  • Outside New York, it is possible that you may be able to bring a bad faith claim and a claim for breach of fiduciary duty. See Suing an Insurance Company for more information.

If Your Insurance Company Offers a Settlement You Feel is Unfair:

  • You do not have to accept it. You are rightfully entitled to the full benefits of your policy coverage. However, you must be careful in this situation. Insurance companies often seek to settle claims for less than their full amount, and no bad faith can be shown if the offer is a reasonable one. However, insurance companies often offer a settlement that is completely out of line with the actual benefits available under the policy and even have attempted to take advantage of the claimant's difficult financial situation to settle the claim far below its true value.

Understanding Your Insurance Policy

One of the great difficulties in enforcing your claim against your insurance company is the policy. Often times, the policy is a lengthy, confusing document containing a lot of fine print and terminology that is ambiguous and difficult to understand. The insurance company has drafted the policy to protect the company, not the insured. A proper review of the insurance policy is the first step to understanding your rights and coverage available. An experienced insurance attorney will know and understand the terms of the policy, will be able to read the fine print and will be able to pinpoint where the coverage issues may be located within the insurance policy.

Why You Should Consult a Lawyer Before Filing a Claim

  • Once a claim is denied, it is very difficult to convince the insurance company that their decision was wrong or to win an internal appeal. It is much easier to confront, convince and cajole the insurance company before a decision has been made rather than afterward.
  • The fact that an attorney is reviewing your policy, assisting you and fighting for your rightful benefits early in the process will distinguish your claim from the others.
  • Insurance companies train their employees to search claims for red flags that will support a denial. It is important to have your own counsel to ensure that a small mistake in the claim process does not become a costly error and an avenue for claim denial.