When your premium is due insurance companies expect you to timely pay your premium. If you don’t they will stop providing coverage. What happens then when they owe you money for a claim? A common experience among claimants is that insurance company’s drag their feet when it comes to claim payments. If this has happened to you there are some useful things you should know about.
When you make a claim on a policy that provides you with coverage it is called a first party claim. When making a first party claim the insurance company has to comply with certain rules of the state in which you live. Almost every state in the United States has regulations pertaining to the handling of claims for first party claimants. In addition, almost every state has adopted the Fair Claims Practices Act which includes a set of principles that each insurance company must abide by. In some states the Fair Standards Practices Act provides a cause of action against an insurer who fails to follow the Act. In other states only the Department of Insurance can pursue the insurance company, but policyholders can make complaints if the companies do not follow Act. In states where you can bring suit under the Act there is often another statute or common law that allows you to sue the insurance company for its unreasonable practices.
Generally speaking, an insurance company must respond to your claim in a specific period of time after being contacted regarding a claim. The company must also honor your claim, deny your claim or tell you that it needs additional time and the reasons why before it can respond to your claim. Bear in mind, that there are numerous reasons why an insurer may need more time. However, an insurer may not simply drag its feet without explanation. If there is legitimate reason for delay, such as necessity of collecting information, you should be advised of the information needed. You should cooperate in providing or assisting the insurer in gathering the information to pay your claim. Remember to always be forthright and never exaggerate or diminish the facts of your claim. Honesty is the best policy. However, that goes not only for you, but the insurance company. If the insurance company has not honored your claim or will not answer your questions timley they may have violated your rights as a claimant and the Fair Claims Practices Act. Breaches of this type may allow you to pursue the company for breach of contract, for tort claims including bad faith. You should take further action by contacting your Department of Insurance to file a complaint and further inform yourself of your legal rights by contacting an attorney who is knowledgeable in the field.