Why is my insurance company jerking me around after I have been a loyal policyholder?
Insurance companies collect premiums and are supposed to invest them so that the money is there for you in case of a catastrophe. They are SUPPOSED to be good financial stewards. Unfortunately, insurance companies made bad investments in the stock market. Every time there is a serious market "correction" and the stock market takes a nose dive, insurance companies tend to short change policyholders who've submitted a claim. They do this by denying legitimate claims and/or lowballing the claims that are paid. A secondary reason for the industry's behavior is that courts and state insurance commissioners have been influenced by the insurance lobby and other shill groups who try to "encourage" business-friendly laws at the expense of the consumer.

My carrier says the policy language means something different than what I think it means. What can I do about that?
Historically, the courts typically favor the policyholder when interpreting policy language. However, as more and more right-wing judges are elected and/or appointed to the bench, we are seeing a greater number of pro-business (anti-homeowner or anti-policyholder) rulings with regard to coverage and penalties involved for wrongful delays, denials and violations of insurance statutes. This is why it is critical that we elect judges who want to protect the American dream of homeownership. If not, insurers will be allowed to destroy that dream and do so without penalty.

If an insurer commits "bad faith," will I be entitled to damages beyond policy limits?
Discouraging bad behavior (i.e., bad faith in the claims handling process) is the very purpose of "punitive damages." Some states do not recognize "bad faith." Most do however even in the states that do recognize bad faith as a cause of action, getting a judgment that penalizes an insurance company to "stick" (in the appellate process) is hard to do. If your elected officials and judges are truly interested in curbing bad faith, they will affirm noneconomic damages awarded for bad faith, assuming these damages are within limits imposed by the state or federal jurisdiction. If judicial campaigns are fueled by insurance companies or tort reform groups (insurance company shills), it is doubtful that such damages will be awarded, let alone, affirmed. As a general rule, states that offer the best protections for homeowners include: California, Nevada, Arizona and Alabama.

Does my insurance company have any obligation to me?
Generally speaking, your insurance company has a duty to handle your claim promptly, reasonably and in good faith. But, the policy is a contract and the policyholder also has duties. Check the section of this site entitled POLICYHOLDER DUTIES for more information.

What does the duty of "good faith" mean?
This duty means that your insurance company is supposed to adjust your claim (either pay for proper repairs or legitimately deny the claim) within a REASONABLE period of time, must cooperate and respond to you within a REASONABLE amount of time, must tell you in writing precisely why your claim is being denied (what contract or policy exclusion or term it is they are relying on to arrive at its denial) and must attempt to find a basis to pay the claim rather than find ways out of paying it.

What are my responsibilities as a policyholder?
The policyholder has the same duty to act fairly and in good faith. You must submit a claim within a reasonable amount of time, cooperate with your insurance company by allowing them access to investigate the claim and provide repair records and estimates upon request. You also have the duty to "mitigate damage." This means that you must stop the bleeding by making temporary repairs. However, and this is important, most policies state that PERMANENT repairs cannot be made without permission of the insurance company. If, for example, you have a water leak, you should turn off the water and/or repair the leaking pipe (and save the parts removed by the plumber and receipts for work done). However, if your insurance company is "investigating" your claim, they may instruct you NOT to remove wet drywall or plywood surrounding the leak until their investigation is complete. In other words, leaving wet materials in place may be contrary to your duty to "mitigate" so always put in writing a request to remove these items and save them (in big, sealed garbage bags) for the adjuster. If the adjuster continues to disallow these repairs, you must cooperate with his or her instruction or run the risk of losing coverage. Policyholders also have the duty to submit to an examination under oath. For more information, go to the section entitled: POLICYHOLDER DUTIES.

What else should I be mindful of when making a claim?
Documentation is the key. Get EVERYTHING you can in writing (emails are good but save them). In states that allow taping conversations, do it. Keep a daily log. And, appoint only one family member as the "point person." If you do not do this, you will probably be a victim of a war of the old "he said/she said" game.

What can I do about my insurer who keeps dragging their feet on my claim?
If you believe your insurance company is delaying your claim, fire off a complaint letter to the adjuster and his/her supervisor. Send it "Certified." If these delays are exacerbating damage done to your home, firmly but nicely state, in your letter, that the delays continue to make the damage worsen and demand that the insurer stop delaying the resolution of your claim. You may also want to copy the top dogs of the company (the President, Vice President - Claims, and others) as well as your state Department of Insurance. Always put on your communiques your policy number and claim number. If the "foot dragging" does not stop, you may need to contact a lawyer.

If my insurance company denies my claim, do I have any rights?
First, check to make certain that your policy specifically excludes the loss. Do not just take the word of your insurer until you check your coverage. If the insurer has wrongly denied your claim, you should write the adjuster, the supervisor, President and other company officials a letter of complaint. Copy your state Department of Insurance also. If you get no relief, you might consider visiting with an attorney or hiring an advocate like a public adjuster to help you fight it out for the coverage to which you are entitled.

What the heck is my insurance department supposed to be doing?
While all states have a Department of Insurance or something similar, most are a bunch of slackers. Rarely do we find go-getters within these departments. There are, however, notable exceptions. The only reason to involve the department of insurance is to get a formal complaint on record. That's it. They typically will not get your claim resolved so do not rely on them to do so. Counting on the department of insurance may hurt you because statutes of limitations may run out, prohibiting you from the legal recourse to which you would otherwise be entitled.

What remedies do I have if my insurance company will not pay my claim or will not pay what it takes to properly repair my home?
Thanks to homeowner-unfriendly judges and lawmakers, the options are typically not good and if you live in a jurisdiction that refuses to penalize corporate wrongdoing, your choices are even more dismal. However, if you live in a state where lawmakers and judges are not afraid to punish corporate committed fraud or bad faith, your choices are better. Your choices are: retaining counsel, demanding the appraisal process, hiring a public adjuster or trying to resolve the matter yourself. Check the section entitled WHEN A CLAIM GOES BAD for more information on your options.

After I filed a claim, the insurance company offered me a ridiculously low settlement that won't come close to covering the necessary repairs. Should I accept the offer?
If you dispute the amount tendered, you should put that dispute, along with YOUR EXPERT'S repair estimates, in writing and send it, via CERTIFIED, to your adjuster. You should NOT accept the money if the amount tendered is below the amount needed to fully mitigate damage (i.e., stop the bleeding). If your insurer is still "investigating" the claim, you should demand that the insurer allow you to begin repairs with the money tendered but require the insurer to put in writing permission to begin permanent repairs (so that later they cannot deny the claim because you made repairs BEFORE their investigation was complete) and instructions for you to follow after the tendered money is exhausted yet more repairs are needed.

Are there time limits on my stating a claim of bad faith?
Most policies have specific time limits on when a claim must be filed after a loss, and also when any lawsuit must be filed. Beyond those time limits, the law typically requires that a suit for bad faith be filed within a specific time frame AFTER the claim has been denied.

Are there time limits on my stating a claim of bad faith following the denial of my claim?
Yes, as indicated above, most insurance policies have specific time limits on when a claim must be filed after a loss, and also when any lawsuit "on the policy" (a lawsuit seeking contract benefits) must be filed. Beyond those time limits, the law will require that a bad faith claim or lawsuit be filed within a certain time following denial of the claim. While there is some question as to what precisely is that time limitation (it varies from state to state, and some state decisions are inconsistent) it is recommended that a bad faith claim or lawsuit be filed as soon as possible, ideally within one year from the date of the denial, in order to be certain that the right to recover certain types of damages (punitive damages for example), is not lost.

Through its contacts, POA has asked a number of leading national experts -- 
ranging from bad faith attorneys to medical doctors and everything in between 
-- to answer general questions posed by our members. In the members only 
section, members can email POA questions and we will forward those questions 
to the appropriate experts. We will then send you their reply. 

To "Ask the Expert", simply email your question to: 
expert@policyholdersofamerica.org

POA is not a political organization. We are an educational organization. But, when you talk about insurance, you cannot avoid the subject of politics.

Insurance companies are regulated by State regulators and must abide by laws created and enforced by legislators and judges, respectively. When these elected officials create anti-consumer laws and/or when industry-friendly judges bend over backwards to rule in favor of big business (and against public good POA is the first to bring our members the news.

It’s no secret that Republicans tend to be far more industry-friendly than are Democrats and Independents. We at POA don’t really care who gets your vote. We just want you to be an educated voter so that when rates skyrocket, your insurance company drops you or your claim doesn’t get paid, you will know why and who is to blame. Only an educated voter can make appropriate choices.

But, there’s another reason why POA follows politics: Many insurance companies have Political Action Committees (PACs) that funnel tons of dough to Republicans who spearhead industry-friendly agenda. For example, when you buy a State Farm policy, you are unknowingly subsidizing anti-consumer lobbying efforts and candidates. By bringing this news to you, you can then make a more educated choice about the purchases you make.

Basically, politics and insurance are inseparable. For this reason, POA has jumped into the mud and muck of politics.

FAQ affiliation denied
This page replaces one from the law firm previously known as Butler Burnette &
Pappas (now known as: Butler Pappas Weihmuller Katz Craig LLP). That law
firm, a defense firm, asked us to remove the FAQs previously posted. POA
credited that firm for the well written and unbiased information. The
attached memo was sent to POA from this law firm. We think you should see it:

Subj:   Unauthorized use of law firm name
Date:   2/3/03 8:25:26 AM Pacific Standard Time
From:   W. Douglas Berry
To:      expert@policyholdersofamerica.org
Sent from the Internet (Details)

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