Few words strike fear into the heart of a policyholder like “Your claim is under investigation.” It’s understandable: you pay your premiums every month in case something happens, so it can be hard to reconcile your “good” behavior with a potential hold-up in the process.
Here’s what you need to remember: your insurance company covers thousands of policyholders, and receives numerous claims each year. Sometimes there is some confusion on their side; other times, you may have failed to provide all of the necessary information. Under some circumstances, however, your insurer could be acting in bad faith and trying to find a way to deny the claim completely. Working with an insurance dispute attorney means you’ll find out which one applies – and you’ll be protected if your insurer is trying to “pull a fast one,” as they say.
The investigation of the claim
We have used this example before, but let’s say you submit a claim to your homeowners’ insurance after a house fire. Your insurer is going to ask for a tremendous amount of information: tax returns, your deed to your home, any contracts you may have had pending, etc. If your insurer believes that you are not being truthful in some way, you will likely be asked to submit to an Examination Under Oath as well.
Once they have all of this information, the company may dig deep to find any discrepancy or hint of impropriety. If they suspect any wrongdoing – intentional or accidental – on your behalf, they may try denying your claim. How they define “wrongdoing” depends on your exact circumstances. For example, let us say that you were in an auto accident 20 years ago and put a claim into your homeowners’ insurance company for a fire loss. If you forgot about that claim when completing your application for homeowners’ insurance, or didn’t mention it when asked about prior claims during a recorded interview after the fire (and it’s understandable if that happens, because most people don’t think a decades’ old auto insurance claim is related to a house fire in any way), your insurance company may try to deny your new claim because you “lied.”
What other types of information may be required for a property claim?
The insurance company may require you to provide comprehensive inventories of damaged property, including quantities, values, costs, and dollar value of loss claimed. They may also ask you to submit a proof of loss. You can provide proof of these items by supplying your written records along with photos and/or videos as visual evidence.
Your adjuster will also look at the damages to your home to determine whether to pay for your losses. This is why documentation is so important. Any missing information or any perceived “gaps” in the documentation may lead your adjuster to believe you are trying to collect more than you are entitled. If they believe you have not cooperated with their investigation (your policy has a cooperation clause), or if you have had multiple claims with multiple insurers, you may find yourself under investigation as well.
Can an insurer use a cooperation clause to deny your claim?
As the insured, you must cooperate with the insurer as a condition to receiving coverage under a standard property insurance policy. The “cooperation clause” requires the insured to participate in the claim investigation if requested. Because of this provision in the insurance policy, insurers can potentially have a basis to deny coverage if the insured fails to meet the terms of the cooperation clause.
Unfortunately, some insurance companies will take advantage of this provision and compel insured individuals to navigate through so many obstacles during a claim investigation that it ultimately persuades the insured to stop cooperating, giving them a potential basis to later deny coverage.
Is a low offer on an insurance claim always an example of bad faith?
An unreasonably low settlement offer from an insurance company may constitute the basis for a bad faith claim. Under the law, insurance companies are required to deal with their policyholders in a fair and reasonable manner. If your insurer has purposely low-balled an offer during the claim settlement process, it is important to speak with an experienced bad faith insurance attorney to discuss your rights.
If you make a claim with your insurance company and find yourself under investigation, you may want to call an experienced Tennessee insurance dispute attorney to help you. At McWherter Scott & Bobbitt, we protect our clients whose claims have hit a snag, or are in danger of being denied or reasons of bad faith. To reserve a consultation with Brandon McWherter, Clint Scott, Jonathan Bobbitt or any of our insurance dispute lawyers, please contact us. We maintain offices in Nashville, Memphis and Jackson to better serve our clients throughout Tennessee and the surrounding regions.
Brandon McWherter has dedicated his practice to assisting insurance policyholders with their claims against insurance companies, including claims for bad faith. He is licensed in Tennessee, Arkansas, and Mississippi. Learn More