Insurance coverage is a technical and confusing area of the law. These disputes involve an insurance company denying coverage and arise in a variety of situations and commonly involve complicated and inter-related policy forms, insurance applications themselves and the prior dealings between the insured and the agent. The legal challenges are further exacerbated by the compressed time frame due to the underlying claims presented by or against the policyholder.
The most important thing to remember is that an insurance policy—any insurance policy—is a contract that binds both parties to a set of mutually agreed-to terms. Just as you paid premiums all those years and upheld your end of the contract, the same holds true for the insurance company.
If an insurance company delays, denies or discounts your claim they may be in breach of the contract. By law, insurance companies are obligated to treat an insured in a reasonable, fair manner. If your insurance company acts in bad faith, you may be able to recover the amount of your loss, along with legal expenses for filing suit against the insurance company, plus interest and punitive damages.
Insurance coverage disputes are most typically resolved in a “declaratory action.” If there is a doubt or question as to the legal obligation of an insurance company over a unique or unusual type of claim, a declaratory action allows a court to “declare” the rights of the parties and the obligations (if any) of the insurance company to provide coverage or defense of the claim. Insurance coverage questions arise in many circumstances such as the timing of a claim, the type of claim, or whether the claim was timely reported to the insurance company.
Many insurers are fair and professional in their handling of claims. However, when a dispute arises between an insured and the insurer, or in cases where the insurer is unreasonable in its conduct toward its insured, it is important to have experienced legal counsel on your side to advise and represent you in obtaining the best outcome. It is important to have a well qualified attorney negotiate with recalcitrant insurance companies.
Nothing is less satisfying than wrestling with an insurance company over a claim. If you’re spending more time wrestling than you are repairing or recovering from a loss, then you need to get yourself a good lawyer.
Written by former law clerk Sean Taylor