As of 2021, over 300 million people in the US have insurance. To keep that insurance, they pay their monthly premiums, which for many represents a financial hardship because they believe their insurance company will stand with them when they face unexpected challenges.
Unfortunately, that is not always the case. Millions of claims are rejected by insurance companies each year, and recent reports show that claim denials are on the rise. One recent study revealed that one company denied 80% of the claims its clients submitted in 2020.
Claim denials are just one of the ways insurance companies disappoint their customers. “Many people do not get a fair fight when dealing with insurance companies,” explains George Salinas, founder of George Salinas Injury Lawyers. “I know how frustrating it can be when the insurance company challenges your claim and devalues your losses, which is why I help clients in their fight to have their voices heard and their unnecessary losses fully compensated.”
Salinas is an award-winning lawyer whose legal specialties include motor vehicle and work accidents, personal injury, drunk driving, and more. He has handled hundreds of cases against insurance companies and corporations. Salinas believes the right to trial by jury is a fundamental part of our country’s foundation, and has found his calling empowering victims of personal injury and wrongful death to exercise that right.
If you are among those frustrated with your insurance company and looking for better treatment, here are some insights on the most common ways insurance companies take advantage of the public, which could help you as you search for a reliable company or struggle to have your claim satisfied.
Denial of valid claims
Determining the validity of insurance claims can be a complicated process, as they can sometimes involve investigations aimed at determining who is at fault or liable. They may also require research to determine the extent of damages and their monetary value, since the complexity of some insurance policies can make it challenging to determine if certain claims qualify for coverage.
There are cases, however, in which it is easy to establish that a claim is valid and should be covered by the insurance policy. Oftentimes, those claims can be denied as well. Insurance companies choose to do that because they know that some customers, for a variety of reasons, won’t appeal the denial.
A recent study looked at 48 million insurance claims denied in 2021 to determine the frequency with which denials were appealed, and found that less than 100,000 appeals were filed. That represents less than 0.2% of the denied claims.
In addition, those who do appeal denied claims rarely consult with legal counsel as part of the process, putting them at a major disadvantage in negotiations. “Policyholders should be prepared for insurance companies to deny liability for valid claims,” Salinas says, “because those companies know that a percentage of claimants will not seek legal assistance to challenge them.”
Underpayment of claims
Even when a claim is approved, it doesn’t mean insurance customers won’t have frustrations. Underpaying claims is another common way insurance companies take advantage of their customers which, according to one study, happens with as much as 11% of claims.
Inadequate loss assessment is one issue that can lead to underpayment. This occurs when an insurance adjuster does not conduct a thorough investigation of the damage leading to the claim, or does not adequately understand the work required for repairs.
Underpayments can also result from the failure on the part of the insurance company to factor in ancillary costs, including temporary accommodations, storage fees, loss of use, and other related expenses. When underpayments occur, the most effective remedy is legal action.
“To challenge an insurance company’s decision to offer to settle a claim for below what it should, claimants must utilize our legal system to get their day in court,” Salinas explains. “The insurance companies, however, know that the legal process involves significant expense and delay. As a result, part of their business strategy is to not offer what they know a jury would likely award. Hiring a qualified attorney helps victims understand what the value of their claim should be and how to navigate the legal minefield when it comes to insurance companies offering below the full value of their losses.”
An attorney experienced with insurance cases can help victims understand what the value of their claim should be and what their policy provides.
Misrepresentations during sales
Insurance companies have also been accused of making misrepresentations during the sales process about the extent of coverage a policy provides. This can involve downplaying or obscuring exclusions and limitations when presenting policies. It can also involve overselling the breadth of coverage by including promises of “complete” coverage in marketing materials that are later revealed by the fine print to be less than complete.
Those exploring insurance options may also experience misrepresentations related to financial obligations. This can include being told that rate increases will be modest, only to later find they are significant, as well as misstatements about out-of-pocket expenses like copays or deductibles, for which the insured will be responsible.
Inflating available discounts in promotional material is another common misrepresentation. With auto insurance, companies may advertise “safe driver” discounts that end up being minimal, temporary, or difficult to qualify for. And with homeowners insurance, “home security” discounts can be misrepresented to draw potential customers in.
Steps to avoiding insurance company mistreatment
Finding a reputable company with a strong track record of following through on its obligations is the first step to avoiding the mistreatments listed above. This starts with reviewing the company profiles provided by your state’s insurance regulator. Often, state agencies provide profiles that show each company’s financial ratings, as well as listing complaints filed against them.
Policyholders who have an experience that triggers a claim should seriously consider hiring an attorney.
“Hire a qualified attorney with experience that can immediately take the reins,” Salinas says. “Insurance companies will try to exploit the time period in which someone is not represented to get statements, recordings, and agreements designed to help settle the claim for as little as possible.”
Overall, those relying on insurance companies must keep in mind that achieving the full extent of their coverage may be a struggle. Insurance companies are not eager to part with their money, even when claims are valid. Those who make it clear they are willing to fight for what is rightfully theirs have a higher chance of having their claims covered.
