Many types of insurance policies cover wide varieties of situations and conduct, and yet most have several things in common. First, to recover, most liability policies require that you are not the at fault party, to recover under the policy. The “why” seems self-explanatory, as otherwise insurance companies feel there would be rampant fraud and collusion. Secondarily, almost all policies have a reporting requirement. There is a “duty” to report known or suspected claims to the insurance company as early on as is practical, so that they may investigate matters and preserve evidence.
There are further duties incumbent upon the parties, most notably the insured, (beyond just the reporting requirement) and this can include the duty to cooperate with investigations, the duty to give statements [written and recorded] as well as statements under oath if required, and to even cooperate with litigation if that is required. Failure to do any of these things may nullify coverage or the policy.
Insurance companies are worried about, and always on the look out for, fraud or suspected fraud. They feel that many claims are overblown or outright untruthful. In fact, many companies have 1-800 fraud reporting lines and also work cooperatively together, operating and funding things like the National Insurance Crime Bureau, where they monitor and share information with each other to try to keep fraudulent claims in check. In fact, insurance companies are probably the biggest compilers of information, data and statistics of any entity outside the government. They are big believers in compiling, comparing and contrasting data with other insurance entities and data bases to help root out multiple claims, fraud or what they deem “professional plaintiffs.”
This is perhaps a good thing, and an understandable thing, considering that they are essentially in the business of handing out checks. However, sometimes they can be overzealous and become too aggressive in thinking or acting like all claims are fraudulent. This is especially true when they act this way towards their own insureds; who have often never even made a claim before (and may have been insured with them for years). Many times the first claim is so negative, that the insureds end up dropping the insurance company. More often, the insurance company drops an insured after their first claim – since they now have become a “liability.” (i.e. They are no longer just sending them money, but they now want money in return) It is for just such situations, and other insurance abuses, that many states have enacted laws to protect consumers and insureds.
Many states have passed Unfair Claims Practices Acts, or other similar types of legislation to protect consumers; and it is also why each state has an Insurance Commissioner. They oversee what is going on and monitor and investigate these types of abuses so they do not occur, or if they do see that they are investigated and rectified. Sometimes the abuses of insurance companies are subtle. Many times things are not overt, but they nevertheless still occur. For instance, many times insurance companies will request the same data over and over and state they did not receive it; or that a claim was “never filed;” or they request Independent Medical Exams (in reality, Insurance Defense Doctors) to examine insureds to state there is nothing wrong with them – and that is their finding in about 98%+ of the cases – so that benefits or treatment can be discontinued. Further, insurance companies needlessly delay every aspect of a claim for manufactured reasons.
After awhile, injured parties simply get worn down and want the claim to be concluded. That works in the insurance companies’ favor. Delay simply allows the insurance companies to continue holding on to their money (earning interest on it all the while) that much longer. They are effectively holding YOUR money at that point. Also, as cases drag on, plaintiffs who are injured and unable to work grow desperate to bring some money in, to make their house payments and to buy food; and subsequently often take any kind of offer. Insurance companies not only know this, but it is one of their chief strategies. They essentially starve plaintiffs out and bleed them dry, until they wear them down into submission.
This may seem unsavory, but it is the way the industry is, and has been, working for many years. This is not so much a commentary on the right or wrong of insurance company conduct, but more a recitation of reality – of what IS currently GOING ON in the industry. You cannot effectively combat insurance companies and deal with them, if you do not understand what you are up against. However, you can fight back. You can avail yourself of your State Insurance Commissioner, or other applicable entities, as well as news outlets, internet blogs, etc., if certain conduct is engaged in. There are ways to combat insurance companies other than in court. One man effectively picketed in front of his insurance company and had the news network there filming his “spectacle,” as he began explaining their abuses. That matter was rectified and resolved rather quickly. Insurance companies do NOT like negative press, it is not good for business or sales.