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Insurance Company Tactics to Deny Liability for Claims

Insurance Company Tactics to Deny Liability for Claims

For more information, please contact The Ahearne Law Firm, PLLC at (845) 986-2777 for an initial consultation and case evaluation.

As mentioned in our May 25th blog post (United States Remains World’s Largest Liability Market), a recent report by Allianz Global Corporate & Specialty (AGCS) found that the potential for more expensive liability losses is increasing, particularly in relation to global product recalls, corporate liability, cyber and environmental incidents. The report also identified defective product or workcrash and human error incidents as the largest causes of liability loss for businesses, based on analysis of insurance claims.

The United States continues to be the world’s largest liability market generating both the highest number of claims, and many of the largest claims according to value. As a result, the United States insurance industry has trillions of dollars in assets, enjoys average profits of over $30 billion a year, and pays its CEOs more than any other industry.  However, insurance companies still engage in trickery and potentially unethical behavior to boost their bottom lines even further. Insurance companies are likely to demand huge rate hikes and refuse more claims than ever. Some of America’s most well-known insurance companies—the same ones that spend billions on advertising to earn consumer trust—have endeavored to deny claims, delay payments, confuse consumers with incomprehensible insurance-speak, and retroactively refuse anyone who may cost them money. Some of the deceptive practices include:

Denying Claims

Some of the nation’s biggest insurance companies— Allstate, AIG, and State Farm among others—have denied valid claims in an attempt to boost their bottom lines. These companies have been reported to reward employees who successfully denied claims or replaced employees who would not.

Delaying Until Death

Many insurance companies routinely delay claims, knowing full well that many policyholders will simply give up. Some have gone so far as to lock paperwork away in safes.  The most shameful use of delay tactics has been by long-term care insurers, who often take advantage of their policyholders’ age and ill health. In the words of one regulator, “The bottom line is that insurance companies make money when they don’t pay claims …They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.”

Confusing Consumers

Insurance contracts are some of the most dense and incomprehensible contracts a consumer is ever likely to see.  More than half of all states have enacted “plain English” laws for consumer contracts, yet many Americans still do not fully understand the risks they are subject to. After Hurricane Katrina, insurance companies used obscure “anti-concurrent” clauses to get out of paying claims. Consumers who purchased hurricane insurance and thought they were covered suddenly found the coverage eliminated by an obscure clause they could not hope to understand.

Discriminating by Credit Score

Increasingly, insurance companies are using credit reports to dictate the premiums consumers pay, or whether they can even get insurance in the first place. The practice penalizes the poor, senior citizens with little credit, and those who have suffered financial crisis through no fault of their own. Insurance companies have denied fiscally responsible people who paid their bills in cash, but refused renewals because of a lack of credit history. Others have seen auto rate hikes near 600 percent despite clean driving records after falling on economic troubles.

Abandoning the Sick

Health insurers looking to cut costs have taken to canceling retroactively, or rescinding, the policies of people whose conditions have become expensive to treat. Some insurance companies have even offered bonuses to employees who meet “cancellation goals.” Rescission targets patients in the midst of treatment when they are at their most vulnerable—even cancer patients in the midst of chemotherapy have been targeted.

Canceling for a Call

Many people are rightly reluctant to make small claims on their home insurance for fear their insurance company will raise their premiums. But few realize that insurance companies often refuse to renew a policy because the policyholder did as little as inquire about the possibility of making a claim. Many times an insurance company will count an inquiry over the phone as the same as a claim, and then they will do everything in their power to drop the policyholder.

#insurance #liability #claims #accident

For more information, please contact The Ahearne Law Firm, PLLC at (845) 986-2777 for an initial consultation and case evaluation.

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