We often hear from frustrated businesses when they are pursuing insurance claims that are seemingly stuck in limbo or when a claim has been denied that they were sure was within the insurance coverage they purchased. We tell them that they are not alone in their experiences—that the insurer’s business model of “delay and deny” is designed to cause policyholders to abandon claims. Insurers recognize that many businesses do not have personnel devoted exclusively to handling insurance coverage issues when they arise. Further, most businesses never understood the dense language of the insurance policies they purchased in the first place. Instead, they just want their claim resolved as quickly and fairly as possible so they can get back to doing what they do best: running their business.
Insurers create a perfect storm when they defer, delay, and then deny meritorious claims. Just know that you are not alone. The following are some claims-handling tactics we commonly encounter:
- “You’ve got a friend in me”
Coverage disputes can appear relatively innocent at the outset. Adjusters will often present themselves as a friend: a reasonable person who just wants to help. Sometimes they offer platitudes about “making things right” and provide some comfort in the policyholder’s time of need. Being nice is appropriate, but bear in mind that the interests of adjusters and policyholders are not aligned. Be careful of what you say as an adjuster will keep a record of it. Most people like to be nice and reasonable, especially when dealing with someone they think is also nice and reasonable. But during a coverage dispute, this congeniality can make policyholders less likely to question their insurer’s claims handling or push back on delays and denials. - “Anticipation…is making you wait”
Unfortunately, it is common for policyholders to experience inexplicable delays from the insurer when pursuing a claim. The adjuster will become non-responsive and offer vague updates about the claim’s status, if they respond at all. We frequently hear from policyholders who have called and emailed their adjuster repeatedly and not received any reply. Delays like this can wear down policyholders and give them the feeling that an adverse claim decision is inevitable. It then comes as no surprise when the policyholder ultimately does receive a denial of coverage. At this point, the insurer is hoping that the policyholder is worn down and will simply drop the claim altogether. - Hiding Behind Policy Excerpts
When responding to a claim, the insurer will send the policyholder a letter offering excerpts from the policy. Frequently, the policyholder will be left to guess at the connection between the excerpts and the facts presented by the claim. The seemingly impenetrable wall of text excerpted from the policy is intended to give the response a veneer of credibility. But understand that the insurance company cherry-picks the language, often policy exclusions, without tying those provisions to the facts alleged against the policyholder. However, policy provisions cannot be judged in a vacuum. They must be read in the context of the policy as a whole and, importantly, against the background of the particulars of the claim. Policies often have conflicting language that can render a provision ambiguous. This ambiguity actually supports finding in favor of coverage, despite an initial denial. By including only certain parts of policy, the insurer can attempt to obscure any inconsistencies it contains. - Threatening Litigation
A claim denial may also be accompanied by a threat from the insurer to file a declaratory judgment action against the policyholder asking the court to find that there is no coverage for the claim. The prospect of litigation can be daunting for many policyholders, particularly those less accustomed to legal disputes. But a threat to litigate does not automatically mean that the insurer has a strong legal argument. In many cases, it is simply a tactic to get the policyholder to abandon the claim.
These tactics and others from the insurer’s playbook are designed to deter a policyholder from fighting for what it is entitled to. Insurers know that many people find insurance policies difficult to understand, which is largely by design. If they can find an opening to dissuade a policyholder from pursuing a claim, they will. Recognizing these claim tactics for what they are and pushing back on the insurer only strengthens a policyholder’s ability to get the coverage the business is entitled to.