(Part 1)
Insurance companies may choose to insure our cars, our homes, our health, our very lives, and they will happily take our money for doing so. However, when the time comes for them to pay for that smashed car, damaged home, failing health, or shattered life, they will fight hard or resort to tricks to avoid paying.
The current economic turmoil has not lessened these unfair practices. On the contrary, insurance companies have resorted to a number of strategies to minimize or avoid claims in order to maximize profits. It is no secret that the insurance industry has been hit hard by the economic crisis. It is only logical that they will attempt to recoup their losses.
In the immortal words of one insurance regulator: "The bottom line is that insurance companies make money when they don’t pay claims… They’ll do anything to avoid paying…" The American Association for Justice (AAJ) recently did a report to describe some of the insurance industry’s dirtiest tricks to outmaneuver consumers:
1) Denying Claims—Some of the nation’s biggest insurance companies have denied valid claims in order to boost profits. These companies have rewarded their employees who successfully denied claims, fired employees who would not, and have resorted to outright fraud—all to avoid paying claims. The denials may sound reasonable from the basic "it is not covered by your policy" to the more outrageous: the auto accident was not an accident because the other party intentionally wanted to hit you.
2) Delaying until death—Many insurance companies routinely delay claims because they know that many policyholders will simply give up. The most shameful use of delay tactics has been by long-term care insurers who take advantage of their policyholders’ age and ill health. They know that if they delay long enough, the policyholders will die and they do not have to pay a dime.
3) Confusing consumers—Anyone who has ever tried to read an insurance contract probably gave up after five minutes. And no wonder. Insurance contracts are some of the most incomprehensible documents a regular person is ever likely to see. Even attorneys and the courts have trouble with them all the time. Despite the "plain English" laws enacted in half of all the states for all consumer contracts, many policyholders still do not fully understand what is and what is not covered in their policies. Savvy policyholders may look for the "fine print." Alas, the problem maybe in the bold print, which is unfortunately written in an ancient Martian language.
4) Discriminating by credit score—More and more insurance companies are using credit reports to dictate whether insurance should be given and if so, what premiums should be charged. This practice prejudices the poor, senior citizens with little credit, and persons who have suffered financial setbacks not of their own fault. Insurance companies have denied insurance coverage to financially responsible people who paid bills in cash but lack a credit history. Others who have fallen on economic troubles saw their auto rate skyrocket to nearly 600% despite a clean driving record.
5) Abandoning the sick—Insurers who want to cut costs have resorted to canceling policies retroactively (called "rescission") when the insured have illnesses or conditions that become expensive to treat. Rescission targets the most vulnerable policyholders - cancer patients who needed surgeries and chemotherapies to fight their cancers, persons involved in catastrophic accidents and required expensive procedures to get well, chronically ill patients, and pregnant women. Some insurance companies have even offered bonuses to employees who meet "cancellation goals."
6) Canceling policies—Many people are justifiably reluctant to make small claims on their home insurance for fear their insurance company will raise their premiums. But few realize that insurance companies often refuse to renew a policy because the policyholder made one phone call to inquire about the possibility of making a claim. Many times an insurance company will treat a telephone inquiry as an actual claim and it will become a black mark on the policyholder’s record. Just by making a single phone call, policyholders may have already sealed their fates and the insurers will drop their policy at the earliest opportunity. It makes no difference if the policyholder only called his or her insurance agent and not the insurer directly. The insurer will likely know about it and the policyholder will suffer the same fate of cancellation.
This author, acting on behalf of consumers, has fought against some of these tricks either by negotiations or in the courtroom. In our next column we will discuss what a beleaguered policyholder can do to stop the abuse, and fight back.
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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant results, including several million dollar recoveries for consumers against insurance companies and big business. He is a member of the Million Dollar-Advocates Forum—a prestigious group of trial lawyers whose membership is limited to those who have demonstrated exceptional skill, experience and excellence in advocacy. He has been featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements for his professional accomplishments and recipient of numerous awards from community and media organizations. His litigation practice concentrates in the following areas: serious personal injuries, wrongful death, insurance claims, unfair business practices, wage and hour (overtime) litigation. He is a graduate of University Law Center Washington, D.C. You can visit his website at www.joesayaslaw.com or contact his office by telephone at (818) 291-0088. (Advertising Supplement)
(www.asianjournal.com)
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