Common Tactics Insurance Companies Use to Deny Your Claim
Automobile/Car AccidentsPersonal Injury
Insurance is designed to provide financial protection and peace of mind to individuals in times of need, such as after a car accident. However, there are instances when insurance companies engage in bad faith practices to deny legitimate claims, leaving policyholders frustrated and financially burdened. These bad faith tactics violate the trust between insurers and policyholders and undermine the purpose of insurance itself. Here are some of the common tactics used by insurance companies to deny claims.
Delaying the Claims Process
One of the most frequently used tactics is unnecessarily delaying the claims process—for instance, by repeatedly requesting additional documentation, stalling the investigation, or simply failing to respond in a timely manner. Unnecessary delays put pressure on policyholders who are already dealing with the stress of a claim, hoping they will give up or settle for a lower payout out of frustration.
Denying Coverage Without Proper Investigation
Insurance companies have a duty to thoroughly investigate claims before making a coverage determination. However, some insurers might hastily deny claims without conducting a proper investigation. This can involve misinterpreting policy language, making unfounded assumptions, or ignoring crucial evidence that supports the claim.
Using Ambiguous Policy Language
Insurance policies can be complex and filled with legal jargon. Some insurance companies may exploit this complexity by using ambiguous or vague language in their policies. When a claim is filed, they may interpret these terms in a way that favors denial, even if the policyholder’s interpretation is more reasonable.
Another tactic is undervaluing claims by downplaying the extent of damage or purposely underestimating the worth of items lost. This can be particularly problematic in cases of property damage, where insurers may offer settlements that are far below the actual cost of repair or replacement.
In some cases, insurance companies might resort to retaliation against policyholders who have filed claims. This could involve raising premiums, canceling policies, or making it difficult for the policyholder to renew their coverage. Such actions are meant to discourage policyholders from asserting their rights.
Requiring Unnecessary Documentation
Insurance companies might request excessive amounts of documentation that are irrelevant to the claim. This serves to complicate the claims process and create obstacles for policyholders, making it more likely that they will give up or accept a lower settlement.
Misrepresenting Policy Provisions
Some insurance companies may intentionally misrepresent policy provisions to policyholders, leading them to believe they are not covered when they actually are. This tactic preys on policyholders who are unsure about the ins and outs of their policies.
Pressuring Policyholders to Settle
Insurance adjusters might use high-pressure tactics to push policyholders into accepting settlements that are far below the actual value of their claims. This is particularly effective when policyholders are facing financial strain and are tempted by a quick payout.
Shifting the Burden of Proof
In a typical claims process, the burden of proof lies with the insurance company to show that a claim is not valid. However, some insurers might attempt to shift this burden onto the policyholder, demanding excessive evidence or documentation to prove the claim’s legitimacy.
Misleading about Deadlines
Insurance policies often have specific deadlines for filing claims. Some insurance companies may mislead policyholders about these deadlines, leading them to believe that they have missed the window for filing when they actually haven’t.