When Insurance Companies Refuse to Pay…
It should not be a surprise that insurers make money when they do not have to pay out on Florida insurance claims. Insurers also make money when they can delay having to pay out a claim.
Generally speaking, an insurance company will take your premium payments and invest them. The longer the insurance company can hold on to that money means the more interest and profit it can make.
In the end, their entire business model is based on risk modeling statistics. They already know the statistics of their own tactics to avoid a payout. They know very few people will notice errors on their part, and that even fewer consumers will seek to litigate the dispute. Think of it as legalized gambling. Their goals are to bring money in without having to pay money out—keep that money as long as possible and pay out less than what they take in. To accomplish this goal, insurers have devised elaborate business models and strategies to avoid either paying out on a claim or paying the claim in its entirety.
The incentive for an insurer to intentionally delay the processing of an insurance claim is to keep your money and use it to make further profits from investments. Typical signs of the delay strategy include difficulties in trying to speak with someone about your claim, the failure to return telephone calls, and the insurance company's repeated and seemingly endless requests to you for more and more unnecessary information.
During the delay phase, you are ensured that your claim is being considered and processed but ultimately no decision has yet been made as to coverage or payment since the investigation is ongoing. Statistically, a certain number of otherwise valid claims will drop by the wayside as some consumers will simply give up and abandon their claim at this stage.
After a lengthy delay phase, the next step for the insurer is to simply deny the claim. Believe it or not, most consumers will take the insurance company's word at face value and assume that the denial was given in good faith and is correct. The problem is that financial motivation exists for companies to abuse that faith placed in them by consumers. Every legitimate good claim that is denied and not paid is pure profit for the company. Many insurers have hired highly paid consultants to devise a system and model for denying claims by using statistical models and studies wherein it was determined that the more claims you denied the more money you made.
Just the same, these insurance companies have also paid millions of dollars in marketing campaigns to influence consumers to believe that those who make claims are bad, greedy and using the system. In the end, insurance is nothing more than a promise to pay and there is nothing wrong with collecting what is rightfully owed to you. As a result of the deny phase, another group of otherwise valid claims will simply end as consumers will accept the company's denial as valid and move on.
At the final stage, a small percentage of consumers will actually challenge the insurance company's denial of their valid insurance claim. Again, since the financial motivation is great to delay the payment, the company will at this stage hire a lawyer to fight you. The insult at this stage is that the insurer is actually using your insurance premiums to pay that lawyer.
Because of the time and stress of dealing with a lawsuit, some consumers will drop their lawsuits over time and give up. For the rest, the insurance company will take its time and at some point will either try to settle the case for as little as it can or roll the dice and take the matter all the way to a trial.
Even the playing field...
The delay, deny and defend insurance game has a negative effect not only on the insurance industry as a whole but more specifically on the consumer who purchased, paid and was counting on the insurance in a time of need. People buy insurance because they are responsible enough to take that extra step to protect their family and property from disaster.
Most people do not understand their own insurance policy much less know what to do when they have a claim. If your insurer has denied your Hurricane Irma insurance claim or has not paid you enough to cover your losses, you should contact a Florida insurance lawyer who is experienced with dealing with Florida insurance companies, claim denials and unpaid insurance claims.
Florida insurance companies have legions of lawyers working for them to fight you, it is in your best interests to have an experienced Florida hurricane lawyer on your side during this process to protect your rights.
About the Author: Patrick Russell, Esq., has been a member of The Florida Bar since 1994 and is an experienced Florida insurance lawyer. Patrick started his insurance law practice more than twenty years ago when he represented homeowners and business owners for their Hurricane Andrew insurance claims. The purpose of this article is educational and not for the solicitation of legal services. The goal is to avoid the mistakes learned from the past, specifically those from previous windstorms. Knowledge is power. Information is free. Mistakes are costly. If you would like more tips on how to process your Florida insurance claim, Patrick can be reached at (305) 608-2977 or here.