You get into a car accident. Your house has been damaged. You submit a claim for insurance. The insurance provider denies the claim. You may proceed with the claim. You carry it out under the insurance company’s policies and practices. It could drain your energy. What to do if the insurance company denies a valid claim?
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You must consider the likely result. But you need to make a decision straight away about defending your rights. The insurance provider must be sued for violation of the contract. Compare the value of the insurance claim to the results of your case. Legal fees will be incurred. Comprehend the financial implications of the matter before filing a lawsuit. It’s possible you won’t get what you want or as much as you desire.
What is insurance?
People get insurance to cover risks. They get insurance for their life. They have insurance for their home or their car. What is insurance? How does insurance work?
Insurance is, in essence, a contract. A policy contains the terms of the contract. A policyholder receives protection from financial loss or recompense from an insurance company. The company pools the risks of its clients to more easily handle payments to the insured.
Insurance plans are designed to guard against potential financial losses. Losses can be large or small. Losses are brought on by harm to the insured. It can also be damage to property or liability for harm or injury given to a third party.
Insurance is a contract or an agreement. The terms and conditions are embodied in a document called a policy. An insurer protects another against losses caused by particular calamities or hazards. The most popular insurance policies are those for life, health, homes, and automobiles. There are core components that make up most insurance policies. The basic components of an insurance policy are:
[ a ] Deductible
[ b ] Policy limit
[ c ] Premium.
Deductible.
The policyholder is required to pay a specified amount in cash before the insurance company would settle a claim. Deductibles serve as a deterrent for filing numerous minor, insignificant claims.
Policy limit.
An insurer will compensate for a covered loss under the terms of the policy but it sets a maximum limit. The policy limit is the maximum limit. The timeline may decide maximums. Depending on the loss or damage, it could happen annually or over the course of the insurance. Or, for the term of the insurance, also referred to as the lifetime maximum.
Premium.
The price of a policy often expressed as a monthly expense, is called the premium. The insurer calculates the premium using your personal or your company’s risk profile. This includes creditworthiness.
How is insurance in Michigan?
Health insurance affects how quickly and frequently people get medical services. Uninsured women have more difficulty. They can’t access prenatal, postpartum, and postpartum care like insured women do. Those without insurance may suffer from a lack of access. It is just as difficult for their unborn children. Some uninsured women now have access to critical medical treatment thanks to Medicaid and other government programs. Their children also receive medical attention.
Approximately 1 in 17 Michigan women of reproductive age did not have health insurance in 2021 (5.9%). In 2021, 3.1% of Michigan’s children under the age of 19 lacked health insurance. In Michigan, during 2018-2020 (average), Medicaid coverage percentages at the time of birth were highest for Black women (66.1%).
Check the rest of the percentages:
[ a ] Hispanics (59.6%),
[ b ] American Indian/Alaska Natives (56.1%),
[ c ] Whites (32.1%), and
[ d ] Asian/Pacific Islanders (23.8%).
The Michigan Association for Justice (MAJ). MAJ is a non-profit membership organization. It was founded in 1945. MAJ is committed to furthering trial lawyers’ needs and interests. It is focused on the unwavering pursuit of a just and efficient judicial system. MAJ has more than 1,300 members from all corners of the mitten in firms of every lawyer. They are all working to represent injured Michiganders. MAJ promotes public safety and protects your right to a trial by jury.
MAJ has this to say about the insurance industry in Michigan.
One of the industries in Michigan with the least regulation is insurance. This is from the perspective of protecting families and consumers. Insurance is exempt from the anti-trust laws that forbid collaboration and price-gouging. Insurance companies are not covered by consumer protection legislation. Insurance companies play games with the lives of policyholders. They do these while their policyholders are experiencing loss and disaster. Players in this industry currently do not face any significant penalties.
Insurance companies are free to reject legitimate claims. They are aware that no real adverse consequence will result for them.
It is a felony if a policyholder is charged with defrauding an insurance provider. The policyholder might go to jail. Or get a fine of $50,000. There are no serious repercussions for an insurance business defrauding customers. A business or its CEO cannot go to jail. If your insurance company cheats on you, they just keep the money. They do that rather than paying for your house or your vital medical care. They make money by investing your money. Off of the profits, they earn interest. All that while you battle crippling medical issues. You suffer homelessness, bankruptcy, the loss of your business, or other hardships. The worst that can happen to the insurance firm is that they may eventually need to pay you. Pay you the money you are owed with interest but not the money they gained in the bond market. In addition to the potential for a laughably light $500 fine. Even that fine is seldom if at all, imposed.
Insurance firms typically come out on top. They transgress the laws. They delay paying policyholders, they reject legitimate claims, and they never experience repercussions. They simply wait till you go away or drop dead to keep your money.
There are four states who do not permit you to sue your insurance company for deceiving you. Michigan included.
Insurance scammers claimed they operate in Michigan because of our favorable legal environment. A scammer operating a bogus insurance company was apprehended. A judge only warned him that he might be subject to a hefty $500 fine if he continued to sell subpar insurance products in Michigan. When it would cost many times as much to establish a real, licensed insurance firm, it is hardly a punishment.
In Michigan, desperate judges have admitted that the regulations in fact let and encourage insurance companies to defraud their own policyholders.
What do you do if your insurance company denies your legitimate claim?
You expect to get the settlement you deserve following an accident. You paid your insurance bills on time and in full. It does not happen that way. Not always. Insurance companies risk making an already difficult situation even worse. They reject a valid claim or behave in absolute bad faith.
An insurance dispute arises when an insurance company declines to accept a valid claim. Many times, insurance companies will reject claims for justifiable reasons. There are also many instances where the insurance declines to pay a claim. These are claims for fictitious or dishonest justifications. Policyholders may find themselves in a difficult financial situation when claims are declined. Particularly if their claim is legitimate. Why would insurance companies refuse to compensate a person with a valid claim?
Bad faith in Insurance.
Bad faith is a legal term referring to a formal complaint filed by an insured person against the insurer. This happens when an insurer handles a claim in an unethical manner. Bad faith is when one disregards the interests of the person to whom an obligation is owed. Doing it while being capricious, careless, indifferent, or intentionally doing so.
There are many types of bad-faith insurance strategies. Some are a lot clearer than others. We list many instances of typical bad-faith strategies below.
[ a ] Failing to give a good basis for their decision to refuse coverage
[ b ] Causing unjustified delays and failing to complete the claims process in a timely manner
[ c ] Misrepresenting the advantages or limits of an insurance policy
[ d ] Ignoring insurance claims or failing to react to them in a timely manner
[ e ] Failure to properly process, investigate, and settle claims
Count on your insurance company to address any questions you have. Queries about filing a claim and its present state. You expect to receive a clear explanation for the denial of your claim if it happens. You might be able to show the insurance company behaved in bad faith. Insurance companies looked for reasons to reject your claim. Bad-faith insurance would rather do that than try to figure out how to pay you what you are entitled to.
Filing a complaint in DIFS.
An insurance dispute is usually handled by the DIFS. Michigan Department of Insurance and Financial Services. The mission of the DIFS is to promote economic development and sustainability. It focuses on the insurance and financial services sectors. DIFS ensures Michigan residents have access to safe and secure insurance and financial services. The Department offers residents of Michigan resources for financial education. DIFS has outreach and advocates consumer protection. DIFS regulates banks, credit unions, and insurance firms. It also governs brokers, agencies, mortgage licensees, and businesses involved in consumer finance.
DIFS provides a form for filing an insurance dispute. Do this first. Contact your agent or insurer. Do it in person if possible.
[ 1 ] Try to find a solution. Speak with a corporate representative or agent.
[ 2 ] Explain the issue in a collected, polite manner.
[ 3 ] Provide dates, sums, and as many pertinent details as you can.
Request a written response from the insurer or agent if you still do not agree with them. Request a list of the precise provisions. Ask for the exact language in the policy that they can use to exclude or reject coverage. To back up their actions, ask for copies of the paperwork that you signed when you applied for insurance.
Still, dissatisfied after a talk with the insurer or the agent? Contact DIFS’ Office of Consumer Services. Ask questions or file a written complaint by completing a form.
The papers you provide form the basis of your complaint. Make sure to include all necessary details and supporting documents, such as:
[ a ] Name of the litigant’s insurance company and/or agent.
[ b ] Claim and policy numbers.
[ c ] Information about any prior interactions you may have had with your agent or insurer.
[ d ] Copies of any records that support your case or provide light on the issue. Do not send original versions of your policy documents or related documents.
Following the submission of your complaint, DIFS will take the following actions:
[ 1 ] Getting a written response by getting in touch with the insurer, insurance company, and/or insurance agent.
[ 2 ] Verifying that the licensees mentioned in your complaint are acting by your insurance policy and the law.
[ 3 ] Assisting you in comprehending potential possibilities or options.
You will get a letter from DIFS describing their findings. and a copy of all the communication DIFS came across while looking into your complaint. Ask DIFS questions if you disagree with DIFS findings or if it wasn’t a part of your initial complaint. You can give DIFS more material for examination.
DIFS authority is limited to the companies and agents that DIFS licenses. DIFS cannot assist in settling conflicts with companies outside their authority or not licensed by them. The insurance industry in Michigan is governed by DIFS. It has jurisdiction over contracts for insurance made in Michigan. In the majority of circumstances, complaints involving out-of-state insurance plans ought to be brought up with the state insurance regulating body where the policy was issued or delivered.
Sue the insurance company.
Suing the insurance company will be your next move. It all depends on the outcome of the DIFS process. Claims against insurance companies have not been in favor of policyholders. You will go to court. Talk to your attorney about this.
A bad faith insurance claim is similar to any other business or contract lawsuit. The case’s central issue concerns the interpretation of the insurance agreement and how it relates to a filed claim.
A lawyer will draft a Complaint and file it in court, just like they would in other contract issues. The insurance provider will then be presented with a summons to appear in court. The litigation procedure has just started.
The judge will typically be asked to interpret the language of the policy and render a decision in favor of one of the parties. It can be up to the jury to decide who wins the lawsuit when the language is open to many interpretations.
Kewin v. Massachusetts Life Ins. Co. is the principal case in Michigan where damages were given for bad faith (1980). The Michigan Supreme Court established the legal standard in that case for the restrictions placed on the amount of damages that can be awarded to a plaintiff who is able to establish that an insurer acted in bad faith.
The losses incurred by the insured as a result of the insurance contract’s breach often constitute damages. Attorney costs, interest on judgments, and contract interest are additional examples of damages. In some heinous circumstances, there is a slim likelihood of obtaining exemplary or punitive damages.
Do a cost-benefit analysis if you should litigate. You are up against a business with a huge financial resource. Your attorney can help you in weighing in the pros and cons of litigating.
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