Profit-Driven Insurers Wreak Havoc on Policyholders
The insurance industry is designed to protect individuals and businesses from financial loss during unexpected events. Policyholders pay a premium in exchange for the assurance that their insurance company will cover any claims they make.
However, the reality is that insurance companies are often more focused on profits than they are on providing coverage to their policyholders.
Insurance companies are under constant pressure to increase profits, which can lead to a situation where valid insurance claims are delayed or denied.
This can leave policyholders with unexpected expenses and a sense of betrayal, as they have been paying their premiums on time and expecting their insurance company to provide coverage when needed.
One of the main ways that insurance companies increase profits is by denying claims or delaying the payment of claims. Insurers may argue that the claim is not covered under the policy or that the policyholder did not provide sufficient information to support the claim.
In some cases, insurance companies may engage in bad faith practices, such as intentionally misrepresenting policy language or withholding payment to pressure policyholders into accepting lower settlements.
That's why when such happens, know that there's help available. At Voss Law Firm, our Texas attorneys have all the experience and skills to help you recover your losses. They'll contend with your insurance company till you get every benefit you deserve. Just call us today at 1-888-614-7730 for a free consultation.
Now, it is also important to note that, one of the main reasons why insurance companies pressure policyholders to accept a lower settlement is because they know that policyholders are often in a vulnerable position, and may be willing to accept less money than they deserve to get the matter resolved quickly.
You see, the problem of insurance companies putting profits over policyholders is not a new one. It has been a bad practice for decades. They come up with different excuses just to deny claims and that's why as a policyholder, you must be aware of these dirty tricks to avoid falling prey to them.
With that being said, let's look at the excuses insurers give to unjustly wreak havoc on policyholders.
Excuses Insurance Companies Give To Unjustly Deny Claims
1. Lack Of Coverage Or Exclusion
One of the most common reasons insurers use to deny claims is that the policy does not cover the particular loss or damage or falls under an exclusion. This usually happens when there's a lack of understanding on the part of the policyholder or the insurer's failure to communicate policy details.
For example, if a policyholder assumes that water damage from a broken pipe is covered under their homeowner's insurance policy, they may be surprised when their claim is denied if the policy excludes water damage caused by broken pipes.
Insurers may also deny claims by arguing that the policyholder did not purchase the right coverage, or that the damage falls under an exclusion even if the policy language is unclear or misleading.
2. Canceled Or Lapsed Policy
Another excuse insurance companies may give to deny a claim is that the policy lapsed or was canceled. In some cases, this may be true and other times, insurance companies may cancel a policy without notifying the policyholder. This is known as a "silent" cancelation and is illegal in many states.
If a policyholder believes their policy was canceled without their knowledge, they should contact their insurance company and request a written explanation.
3. Pre-Existing Damage
Insurance companies may also deny a claim if they believe the damage was pre-existing. In some cases, insurers may send out an adjuster to inspect the damage and then claim that the damage was pre-existing.
However, this is simply an excuse to deny the claim. Policyholders should document any damage or losses carefully to provide evidence that the damage was not pre-existing.
4. Requesting Needless Documentation
Insurance companies may wreak havoc on policyholders by requesting unnecessary documentation, conducting lengthy investigations, or requiring multiple rounds of documentation before making a decision. By requesting unnecessary documentation and delaying the claims process, insurers hope that policyholders will eventually give up or accept a lower settlement offer.
While insurers are entitled to investigate claims thoroughly, they must also do it in a timely and efficient manner. If an insurer unreasonably delays the claims process, it may be considered bad faith and could result in legal action against the insurer.
5. Inappropriate Reduction Of Labor And Material Costs
Inappropriate reduction of labor and material costs is a situation where an insurance company denies coverage for a claim by undervaluing the cost of labor and materials required for repairs or replacement. When a policyholder files a claim, the insurer typically sends an adjuster to assess the damage and determine the amount of compensation the policyholder will receive.
One of the methods used by insurance companies to determine the amount of compensation is to apply depreciation to the value of the damaged property.
As an excuse to deny a claim, insurance companies may use improper depreciation methods to reduce the value of the damaged property and therefore, the amount of compensation. For example, an insurer may apply a depreciation rate that is higher than what is reasonable, or they may not consider the age or quality of the materials used in the repairs.
6. Cosmetic Damage Only
This refers to only superficial damage, such as scratches, dents, or other minor blemishes, that do not affect the function or safety of the item.
Insurance companies may argue that cosmetic damage is not covered under the policy or does not meet the deductible. They may also argue that the cost of repairing cosmetic damage is not significant enough to warrant a claim or that the damage was pre-existing.
However, the policy language and coverage for cosmetic damage can vary depending on the insurance company and the specific policy. Some policies may explicitly exclude cosmetic damage, while others may cover it under certain circumstances. Policyholders need to review their policy language carefully and understand what is covered under their policy.
7. Deterioration Of Property
Deterioration refers to the gradual wear and tear that a property undergoes over time due to age, exposure to elements, or other factors.
Insurance companies may argue that the damage is due to the normal wear and tear of the property rather than a sudden, unexpected event that is covered under the policy. They may also argue that the policyholder failed to properly maintain or repair the property which contributed to the damage.
When To Contact Our Texas-Based Attorneys
In the event of an accident, we anticipate that our insurance company will be there for us and provide all the assistance we need until we recover our loss. Sadly, this is not always the case as many insurance companies still look for ways to deny claims. It ought not to be so.
At the Voss Law Firm, our insurance claim attorneys are very enthusiastic about helping policyholders recover fairly, and they have the knowledge, expertise, and resources to successfully contest any denied claims. If you need assistance or have any questions about an insurance claim that has been denied, you can reach out to us today at 1-888-614-7730 for a free consultation.
