Insurance companies do not always have to step in and pay every insurance claim unless its coverage is triggered. An insurance claim is a demand for money and compensation against an insured, the person with insurance. The demand may lead to a lawsuit or starting arbitration proceedings.
To start getting insurance coverage, something happens – a particular event such as a car accident or 18-wheeler accident. This “event” makes an insurance company responsible for paying a claim. In general, without a proper claim for a covered event, an insurance company does not have to provide insurance coverage.
Liability insurance is usually either “occurrence based” or “claims made.”
Most homeowners insurance policies, personal and commercial auto policies, and commercial general liability policies are “occurrence based.” Large companies and some government entities have a mix of both “occurrence based” and “claims made” insurance policies.
Policies that are “occurrence based” are triggered and take effect when damage is caused by an event that is the specific kind of event covered under the insurance policy terms during the policy time period. For car accidents, this means a car accident is the event. Under these types of policies, insurance covers all qualifying events that happened during the policy time period even if the actual insurance claim was filed with the insurance company after the policy time period already passed. An injured person’s claim cannot be outright denied years later as long as the triggering event was during the time the insurance policy was valid.
For example, an asbestos case event may have happened, but the actual insurance claim was not filed until 40 or 50 years later. As long as the event or occurrence happened during the policy period, it may be covered under the insurance policy in place at the time. This is worth noting, since insurance policies in the past did not have as many insurance exclusions and other contract terms that prevent an injured claimant from recovering.
This occurrence based type of insurance also can cover claims that involve continuous harm and damage, like pollution and construction defects. These events and occurrences are covered, but take place over may days, months or even years. It would be wrong for insurance companies to rely on the fact that the actual harm caused was not discovered until decades later to deny coverage.
“Claims made” policies require that a claim must be reported the right way, and on time under the rules of the insurance policy. This type of insurance policy requires more than occurrence based policies. Both the triggering action or event must happen during the policy period time, and the claim must be reported to the insurance company on time in order to be given insurance coverage. Whether an insurance company will pay depends on when the claim was made and reported to the insurance company, rather than when the cause of the claim happened.
Filing a claim late does not always mean the claim will be totally denied, but if you wait too long then the insurance company may have a defense against paying. They may argue they were put at a serious disadvantage, or “prejudiced,” because the claim was so late they cannot defend themselves against a claim (witnesses disappeared, they could not investigate, etc.).
Other examples of these kinds of policies include malpractice and professional liability insurance policies.
For both first party claims (which are claims made by a person who has the insurance), and third party claims (which are claims made by an outside person who was hurt and making a claim against the person with insurance), the insurance company has a financial reason to delay payment.
Insurance companies are businesses that make money by taking investing money they get, such as the insurance premiums paid to them, and then reinvesting that money. Delaying payment of a claim for a couple months can make the insurance company millions of dollars.
In some cases, an insurance company may have a valid reason to delay providing coverage for a claim. It may be unclear that the insurance company’s client is responsible for the accident, or the entire scope and range of damages may be unclear. After all, there are many factors that can affect the value of your claim and each part needs to be supported with evidence.
But when an insurance company acts in bad faith and causes delay without a valid reason, they may be on the hook for much more than had it just paid the original claim value. Failing to respond to notice of a claim or occurrence can be grounds for a bad faith lawsuit.
Crafting the right claim is crucial to recovering from an insurance company. The claim needs to be made on time, and contain the right information according to the words of the insurance policy’s terms. In some cases, there can be an unclear situation. A claim might not seem to be covered under an existing insurance policy and does not need to be reported, but then it could become a part of a covered claim and the claimant would not want to risk reporting a claim late. A person with insurance can have multiple policies, such as excess and umbrella insurance policies, creating gaps in coverage that can make it complicated to hold the right insurance companies responsible.
The right personal injury lawyer can help guide you through the insurance claims process.
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 recognize the approaches and tactics used by insurance companies. The right attorney can advise you to help you identify the best step forward in getting you all of the compensation you deserve.
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.