What goes on inside injured claimant’s head is relatively straight forward: recover from his or her injuries, get compensation and move forward from the car accident or truck accident. But what goes on inside a large corporation with a lot of resources is less clear to the public. As a business, the goal of insurance companies’ is to make money. To protect its money against an insurance claim, the insurance company can rely on many defenses.
An insurance policy is a contract. Like most contracts, this means that the insurance policy is controlled by state law. Each state has its own unique laws, and how the court will treat the specific wording of the insurance policy terms. Insurance companies make arguments based off the wording of an insurance policy to form defenses, or reasons to deny a claim. If someone does not follow the rules and procedures set out in the contract they signed, then the insurance company can try to use their noncompliance as a reason to let it all go.
Many insurance policies have a requirement that the claimant provide notice to the insurance company. This means that it is the job of the injured claimant to let the insurance company know within a reasonable time that he or she is filing a claim. If the claimant waits too long, the insurance company can use this as a reason to deny the claim. Unfortunately, depending on the unique facts of each case, the court can agree with the insurance company.
Following the terms of a contract and other legal obligations is a two-way street. The insurance company also has to give a claim on time, or risk losing millions of dollars. If a broker is to blame, then the broker’s own insurance may come into play to cover for the broker’s mistakes. In some cases, the insurance policy terms about notice can make both the insurance company and the broker potentially liable.
It is important to check the exact words in the insurance policy contract. Some policies require the notice to be in writing, sent to a specific office or department or by a certain communication method like the mail or online system.
Another common defense that insurance companies try to use as a reason to deny an insurance claim is that the claimant does not have an insurable interest. This means that, under the law, the claimant does not have the ability to make a claim because the injury or damage has nothing to do with the claimant.
For example, usually a person takes out a life insurance person who is a family member. This is typically valid. But a person cannot take out a life insurance policy on someone who is not related to them at all, and then try to collect on the policy when they die.
But a person can have an insurable interest in property that affects his or her money and finances. For example, if a person rents real property like a building or house and has the option to buy it later on, then he or she has an insurable interest even though the person does not actually own it at the time. This also can happen with cars or boats where they have not yet gotten title of the property, but still have an insurable interest.
Loss Payable Clause
A lender is usually a bank or financial institution that gives a person a loan. The person who gets the loan usually also has insurance. In some cases, the lender and the insurance company will write the contract so that the person who got the loan and with insurance is not paid and the lender instead gets the money.
Policy Time Period
Not all insurance claims are triggered by a single and easily explained cause or act. A car accident can trigger an insurance policy fairly clearly under the terms of auto insurance. But in some cases involving negligence, which is when a person with a legal duty then fails to carry that duty out, it can be less clear. Some negligent act can cause damage months or years after the fact.
For example, let’s say someone installs a bad boiler. It could take years for the damage or bodily injuries to take place. By then, the original insurance policy that might have been in place at the time is probably no longer in effect. The new property owner with the bad boiler and the currently active insurance policy as well as the new insurance company may try to shift blame on the other. Which insurance company should take responsibility depends on the state’s laws. Some states even say that both the original insurance company and the new insurance company should take responsibility for any damages or injuries that happen because of the original negligent act.
In most, if not all, cases, the insurance company needs to investigate in order to find the cause of the damages or injuries, when the cause actually happened, the type of insurance policies that are playing a role in the case and more. Depending on the case’s unique facts, it could be that the responsibility began when the claimant submitted their application to the insurance company. But each insurance company handles their insurance policies differently, and often add in wording that protects the insurance company from having to cover or pay for more than they absolutely must. The restrictive language frames these limits.
Unclear Policy Terms
Generally, plain, ordinary, and customary definitions of words are used. But some insurance policy contracts create their own meanings of words, and these are legally binding. Many insurance policies have a section with definitions of their terms. Usually, if the insurance company wants a specific word to have a unique or specific meaning, then they will list the term in the definitions section with what they want that particular word to mean.
When an insurance company properly writes out the definitions and the terms are clear, then it is hard for the claimant to argue how they understood the word, or their definition for the term. When these definitions are unclear, the court and lawyers can look at many different aspects:
- One insurance policy term that contradicts another term
- The insurance policy term is illegal
- The insurance policy term from one policy, such as an older policy, contradicts another term
- The insurance policy term does not apply to the specific claim
- The insurance policy term is completely undefined
Sometimes an unclear insurance policy term can be given a meaning by the court. If it cannot be given a meaning, then the court might simply not enforce it. This means that the court will either decide what the unclear or conflicted meaning of an insurance policy term is, or ignore it altogether.
In some cases, an insurance policy contract term is unclear on purpose. The idea that anyone would write an unclear contract term seems illogical. Why create confusion? One reason is that the insurance company can add the meaning of the term later on.
For example, a lot of auto insurance policies and healthcare insurance policies use the term “medically necessary.” This term can mean a lot of different things to a lot of different people. What is “medically necessary”?
The general idea is that the insurance company will cut off payment of a claim for medical treatment that is not “medically necessary.” The insurance company may then take a look at medical bills, and then argue that the medical treatment an injured claimant received was not really needed. Or, the insurance company may take it a step further and say that the injured claimant is pretending his or her injuries are worse than they really are to drive up the cost of medical treatment and the amount of money they can recover. The insurance company will also likely hire experts to help support their claim.
Find an attorney that knows how the insurance company thinks and operates. The right personal injury attorney can help you move past the insurance company’s defenses and focus on compensation and recovery for your losses.
Contact an experienced personal injury lawyer
Without experience in the insurance industry or legal experience, understanding which factors or evidence can help or hurt your case can be difficult to understand.
Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.
The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-524-8139 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.