Five Tricks Insurance Companies Use to Deny Claims (and How to Avoid Them)
Insurance is a modern necessity, and it can often be a lifesaver. When disaster strikes, whether it involves your property , your business, or your health , getting paid for your claim can mean the difference between surviving the emergency unscathed or being buried under bills for years to come.
While this may seem pretty simple, anyone who has actually dealt with insurance companies knows that their least favorite thing in the world is paying out claims. In fact, studies have shown that 17% of claims submitted to HealthCare.gov insurers and 18% of claims submitted to private insurers are denied, with some insurance companies denying nearly 50% of all claims.
In fact, some insurers use several legal but sneaky tricks to avoid paying out claims. Here are five common tricks that insurance companies will use against you.
Move as slowly as possible
The simplest trick an insurance company can use is to drag out your claim—the phrase “deny and postpone” has become synonymous with the insurance industry as a whole. This tactic works because your insurer knows you’re desperate to settle your claim; that’s the whole point of insurance. The longer they make you wait, the more likely you are to accept whatever they offer you, even if you know it’s far less than you’re entitled to.
Delaying tactics may vary, but may include:
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Paperwork overload: Insurance companies sometimes request huge amounts of (sometimes unnecessary) paperwork, which takes a lot of time to collect and organize.
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Change of staff. Insurers may change the adjuster and other staff working on your case, and each new person will need some time to review the claim and become familiar with it.
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No Response Statement: Your insurer asked for something and you provided it. A few weeks later they claim they never received it and ask you to provide it again.
The best way to combat this tactic is to keep careful records. If you think your insurer is asking for unnecessary documentation, ask them to explain why they need the documents—sometimes this makes document requests magically disappear. Send all written communications via certified mail, and turn on read receipts for emails and other electronic communications.
Love Bombing
Insurance adjusters are often very nice to you when you first start dealing with them. They express sympathy, use the words “I’m sorry” in the context of your injuries or losses, and generally seem warm and friendly. This is nice and may even be sincere. But it’s also a tactic they use to delay or ultimately find reasons to reject your claim.
Research has shown that apologies can be a weapon, and that people will tolerate delays and settle for less if they think the other party is taking responsibility or expressing sympathy. Being overly nice to you can trick you into thinking you can rely on the insurer to handle things on your behalf. This allows the company to drag things out as long as possible while deceiving you. This love bombing can also trick you into saying things you shouldn’t, as we’ll see in the next post.
Twisting your words
Another reason an insurance adjuster or other employee might apologize to you? Because it may gently encourage you to express your own regrets, which can then be used against you. Any expression of apology or regret can be interpreted as an admission of guilt. And establishing a friendly, sympathetic relationship with you can be a tactic to get you to say more than you should by speculating about the cause or your liability in the claim.
For example, when talking to a friendly adjuster about a car accident you were involved in, you might tell him that you wished you had noticed that the other car was driving erratically—if you had, you could have avoided the accident. This may seem like a simple comment, but it can be twisted into an admission that you weren’t paying attention—and thus your claim will be rejected.
Insurers will also sometimes require you to provide a recorded statement, often very quickly after the incident covered by the claim. They will sometimes argue that this is better for you as it will speed up the claim. But a hastily recorded statement can also lead to the claim being rejected – if you are wrong or inaccurate about anything in your statement, this can be used as grounds for rejection.
To avoid the above mentioned techniques, follow a few simple rules of interaction with insurers:
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Attorney. It may seem unnecessary to hire an attorney to help you resolve insurance claims, but you should always have an attorney when dealing with insurers. An experienced attorney can ensure that you don’t say anything that could hurt your claim.
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Never record. You are not usually required to provide recorded statements, so do not do so. Insist that all communications take place in person or over the phone with your attorney present.
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Be suspicious. If an adjuster or other insurance representative is overly friendly, don’t fall for it. Their sympathy may be genuine, but it can still get you into trouble if you let your guard down.
In a hurry
Ironically, an effective tactic for delaying and denying claims is to rush things. You file a claim, and before you have time to organize, hire a lawyer, and recover from what happened, the insurer is on the phone with an offer to settle . This is often combined with pressure—such as sending you a letter telling you that you have two weeks to accept the settlement offer or the company will “drop the case.”
This is usually done to reduce the payout – this quick and easy settlement will likely be much less than the amount you are actually entitled to – and to force you to make mistakes. In your rush to gather information, you are likely to make mistakes that can then be used to get your claim dismissed.
There are two simple ways to protect yourself from this:
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Slow down. Ignore the pressure to respond immediately or to meet arbitrary deadlines. Take your time, gather information, and respond when you are ready. A lawyer can help by acting as a buffer between you and the company.
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Know the law. If your insurer tells you they will close your claim, let them. It’s a pointless administrative action. Your state’s laws will have a statute of limitations on your claim — a period of time during which you have the legal right to file a claim. As long as you’re within that time period, you can force the insurer to reopen the claim.
Low ball
If your insurer doesn’t think it can deny your claim outright, it may offer you a low settlement. You shouldn’t accept the insurance company’s calculations as the truth. In fact, the most important piece of information you can get about the claims process is that you are allowed to hire your own insurance adjuster. A public insurance adjuster works for you, not the insurance company, and will often come up with a much higher settlement for your claim.
Hiring your own adjuster also saves you from internal delays, as you won’t have to wait for your insurer’s processes or play phone tag with their adjuster. In addition to an experienced lawyer, a public adjuster can also ensure that you have all the support and knowledge you need to navigate the often murky world of insurance claims.