Insurance Benefits: Law Issues
There is a certain peace of mind that comes with having an insurance policy in place. Imagine, then, experiencing a loss, which you believe is covered by the policy, and being denied benefits by the insurer. Not only is that peace of mind gone; you’ll wonder what happens next. A San Jose contract attorney can explain that all denials are not necessarily final; there may be options.
Types of Insurers
Insurance denials are seen across the board but very commonly among the following types of insurers:
- Auto insurance
- Medical insurance
- Disability insurance
- Homeowners insurance
Good Faith and Fair Dealing
In every insurance policy contract in California, there is an implied obligation of good faith and fair dealing. The most fundamental aspect of this obligation is that the insurer must not do anything that would unfairly deprive the insured of the benefits of the agreement, which is the right to collect benefits for a properly submitted claim.
Clearly, not every denial of an insurance claim is improper. However, the reality is that insurance companies are for-profit businesses; denying claims increases profitability. If an insurer insincerely, falsely or fraudulently denies coverage on a legitimate claim, they may be acting in bad faith.
In addition to outright denials, insurers may also do this:
- Underpay on an insurance claim
- Unreasonably delay paying
- Unreasonably refuse to defend their insured in a covered claim
- Unreasonably refuse to authorize legitimate medical treatments in a covered claim
- Inadequately investigate a claim
Challenging the Denial
Too often, the insured feels there is no choice but to automatically agree with the denial; that can be a mistake. The first step is to examine the reason for denial; the insurance company is obligated to provide a written explanation. The insured can try and persuade the insurance company to amend its decision, but, all too often, that proves fruitless. Complaints can be filed with the California Department of Insurance, but it has no power to force the insurer to pay a claim. In many cases, the insured is left with one remedy: a lawsuit.
The potential recovery under a bad faith action begins with the contract damages; that is, what the insurance company should have paid the insured to properly settle the claim. Other damages may include any out-of-pocket expense incurred because the claim wasn’t paid, attorney fees and, if appropriate, punitive damages.
Contact a San Jose Contract Attorney for Legal Advice
If you have been denied a claim for which you believe you are entitled to receive benefits, call Lori Costanzo at 408-993-8493.