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Late Filing an Insurance Claim?

Posted on: November 16, 2022

Chi Hung Nguyen
November 16, 2022

Late Filing an Insurance Claim?

Learn about what happens if an insured files a late claim

Experienced personal injury lawyers can give you advice about the importance of deadlines and time in any truck accident or car accident lawsuit. Wait too long, and the delay can make or break your case.

If you suffered from bodily injuries or property damage that happened a long time ago, one question that you might have before going through the insurance claims process is: Am I too late to file my claim with the insurance company?

Late Notice and Prejudice

In insurance policy contracts, notice means officially letting the insurance company know that a claim has been filed according to what the contract requires. Usually, providing late notice is not a problem unless it is so late that it prejudices the rights, conditions or provisions in the insurance agreement or policy. In other words, filing an insurance claim late can be a problem if you file the claim so late that it affects the insurance company’s own ability to examine or defend itself and use its own legal rights.

But this does not mean that an insurance company is completely off the hook. Insurance companies must do their part. In most cases, insurance companies have to provide proof that they were prejudiced, or put at a serious disadvantage, because they received late notice of the claim.

The law set the bar high for insurance companies who want to argue that they were prejudiced, making the burden of proof heavy for insurance companies. The insurance company has to argue and prove to the court that if the claim had been filed sooner, they would have handled things differently. For example, if a policyholder makes a claim multiple years after the property damage happened, then it could be hard to verify the facts surrounding the claim — like finding witnesses, documents or other evidence.

Without this kind of objective evidence and proof, it is hard for an insurance company to find out whether the injuries and damage happened the way the claimant said they did, or if some other incident intervened from the time the injured claimant was hurt to the time the claimant finally made their claim.

Note that each state has different laws. In some states, the insurance company does not have to prove that it was put at a disadvantage at all due to the injured claimant’s late notice because the law automatically assumes that late notice put the insurance company at a disadvantage. Then, it is up to the injured claimant and his or her attorney to counter this presumption and prove their claim is actually covered by the insurance policy.

Whether or not the insurance company got late notice, the insurance company must make their decision about providing coverage in a reasonable time. If the insurance company does not make its decision in a reasonable time, it gives up the late notice defense it may have had. Waiver means a person or company knows it has a right, but gives it up. This waiver would apply to both actual and constructive knowledge that could have been asserted by the insurance company. Insurance companies that fail to make their decisions about whether they will cover a claim within a reasonable time lose their chance to argue that they were affected by late notice of a claim.

Late Notice and Underage Minors

A common mistake of some lawyers is that they think that if they represent a minor person or child, they will have until the date that the child reaches majority age plus one year to file an insurance claim. But this is not always the case.

The insurance policy may have a suit limitation clause. This is a contract term that the policyholder signed that states that certain insurance claims must be reported to the insurance company within a year from the date the injury happened.  In these cases, it is best to put the insurance provider on notice immediately, regardless of whether the injured claimant is an adult or minor.

After Late Notice

If you are the insured and filed an insurance claim late, you may receive something called a “reservation of rights letter.” A reservation of rights letter is sent from the insurance company to its policyholder, and any other person covered under the insurance policy. The letter simply states that they want to preserve their rights and defenses in this particular case, including late notice.

The reservation of rights letter is important because it has to tell the policyholder and insureds all of the possible defenses, like late notice, that the insurance company thinks it has against your claim. Through this letter, the insurance company basically says that while it accepts your claim and likely will provide coverage at this time, the insurance company might take it back later. The insurance company will investigate, and if it thinks it has a real reason to deny the insurance claim, it will.

As soon as the insurance company recognizes there might be a coverage issue, it should send out a reservation of rights letter by certified mail, return receipt requested. This method of mail allows the sender to get proof the letter was received. But the responsibility of the insurance company does not end there.

As the insurance company uncovers more facts about the claim, the insurance company should continue to keep the policyholder and insureds updated and informed about its defenses against your insurance claim. New facts may mean new defenses become available to the insurance company, or that the defenses that the insurance company thought they had actually do not exist. The insurance company should also inform the insurance broker and agent by sending them a copy of the reservation of rights letter. Just as the claimant cannot take too much time in filing his or her claim, the insurance company cannot take too much time in sending out the reservation of rights letter. An insurance company that takes too much time to send out this letter risks waiving its defenses.

The reservation of rights letter should at least include:

  1. The insurance policy number,
  2. The claim number,
  3. The date of the incident, injury or loss,
  4. Identify which terms and provisions in the insurance policy are disputed, and
  5. Provide details about the facts and laws of each coverage issue in dispute.

It is against the insurance industry’s customary practice to avoid paying a valid claim by trying to reserve rights to policy defenses that are not supported by the facts and evidence.

Most jurors also consider insurance companies as a seller that provides insurance as a service to its customers: the policyholder and insureds. Because the insurance company is like any other business that provides its customers a service, jurors may not think it is very important that the insured did not follow each small technicality in an insurance contract. For example, a jury might not think it is a good reason to deny, or slowly process an insurance claim just because the insured’s policy terms required that he or she provide certain claim documents or information, especially if the insurance company, with all its resources, could have gotten the same documents and information itself.

In fact, if an insurance company does not thoroughly investigate the claim and insurance coverage in a reasonable amount of time, or if the insurance company harasses its insured, this behavior may be grounds for a bad faith claim that can turn a small claim into a multimillion-dollar award. Unfortunately, there are several examples that show insurance companies act in bad faith. The insurance company cannot send a reservation of rights letter, or claim that it is still investigating, for several months or years with no end in sight and leave the insured without answers.

The reason insurance companies are required to send a reservation of rights letter is that lawmakers and courts understand that most people are not experts on the ins-and-outs of insurance law and contract terms. Understanding everything that happens after filing an insurance claim late, and how it can affect your case requires knowledge and experience.

Contact an experienced personal injury lawyer

Navigating complex personal injury cases and handling insurance companies can make the recovery process even more difficult. Experienced attorneys strategically weigh the cost and benefits of each case to minimize the time and expense involved while maximizing their clients’ compensation.

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 713-528-8108 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.

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