Most of you have insurance. You insure your autos, your homes, your health (medical insurance), your income (disability insurance) and your lives. You may also insure your businesses against damage to property used for commercial purposes and loss of income. Your insurance includes protection against lawsuits filed by a third party against you, and you expect your insurance company to defend you in that lawsuit and protect you against a judgment for money damages.
We buy insurance not because we want it but because we need it – fear of the future motivates us to protect ourselves against injury to ourselves, our families and our property. The prudent person buys as much insurance as he or she can afford – sometimes even more. We seek from our insurance company peace of mind and security against the risk of financial injury caused by the unexpected.
Your insurance company is a friend when you agree to purchase the insurance. However, often that same insurance company becomes your enemy when you make a claim. The claims process is often a hostile and difficult one with a burdensome amount of paperwork and frequent requests for more information. Usually with the goal of finding a way to turn down your claim or limit payments. Some insurance companies reward their claims handlers for keeping claim costs down by basing their compensation on how little they pay on legitimate claims.
Insurance companies are powerful financial corporate structures. They have large treasuries. While the purchase of a policy may take place at your home or business or at a local office, things are different when a claim is made. Nearly all of the time you are dealing with someone who is hundreds if not thousands of miles away. A face to face meeting is rare, except when an investigator shows up at your door unexpectedly. Indeed, your insurance company has the power and control over you in your relationship with it.
What can you do when you believe your insurance company acts unfairly? How do you combat “low-balling” or wrongful refusals to pay you what the insurance company promised to pay you for the protection that you purchased?
You can go to your state Department of Insurance. However, these state executive departments are generally ineffective. More than one-half of the states under-fund their Departments of Insurance, so they have inadequate staffs and resources to handle complaints from the public. In some states, the Department of Insurance has been graded as low as an “F” by an independent agency. Not surprisingly, when a claim is denied your insurance company will usually refer you to the state Department of Insurance if you disagree with the claims decision, knowing that you will receive little help.
What your insurance company does not tell you is that there are ways to combat its wrongful denials. For example, in nearly all states, there is an Unfair Claims Practices Act which lists 16 unfair claim practices which insurance companies cannot engage in. You are never told about this when your insurance company denies a claim.
In addition, all insurance companies must abide by a duty of “good faith and fair dealing” in their investigation, administration, and decisions regarding your claim. If your insurance company violates these duties to you, you can sue and obtain money damages for what is owed you under your policy plus damages for your worry and anxiety and in some instances attorney fees. And, in the cases of malicious and fraudulent claims handling, your insurance company may be liable to you for punitive damages based on a civil fine which you receive to punish the company for its wrongful conduct.
We can help you evaluate your claim and determine if you need to sue to get what is rightly yours under your insurance policy. You paid for protection; YOUR insurance company should provide it! — Guy O. Kornblum
Mr. Kornblum welcomes your comments at email@example.com.
I often state that it is our recommendation that anyone owning an auto have primary liability (protection if you negligently hurt others) policy limits of $300,000 per person and $500,000 per accident. In addition, and an excess policy above that which provides at least $1 million in additional liability coverage and also if you are injured by an uninsured or underinsured motorist protection.
As to the latter, if you are injured by the negligence of a third person with no insurance or insufficient coverage to compensate you or others in the car, then your policy kicks in and provides additional coverage. For example, if you have the total of $1.5 million I have recommended, and you are injured by a negligent driver, you have that additional sum which is available to pay for your injuries. If the negligent driver has $100,000 in coverage you have $1.4 million. Your UM/UIM protection pays if a) the other driver is negligent (i.e. you have added to his or her liability protection on your policy), and b) causes injury, (i.e. medical expenses, pain and suffering).
I also stress that in order to qualify for this coverage you must purchase liability insurance in the same amounts as the UM/UIM insurance that you want. Make sure you cover this with your agent when discussing your auto policy.
Let’s discuss how the matter proceeds if the UM/UIM claim is denied or challenged. In the case of UM/UIM claims, California law mandates that these claims be arbitrated, and that the decision of the arbitrator is final and cannot be appealed except in rare cases. See Insurance Code section 11580.02.
If you have gotten this far without a lawyer, I highly recommend your engage one to represent you. What will take place now needs an experienced lawyer to guide you through the process.
Arbitration is a formal proceeding in which the parties submit their dispute to a neutral (lawyer or retired judge usually), who has authority to make a decision, based on the evidence presented. The decision of the arbitrator is binding on the parties.
One thing that might happen before an arbitration is that the parties agree to mediate the UM/UIM claim. A mediation is a meeting of the parties supervised by a “neutral”, usually a retired judge or experienced lawyer, who oversees the negotiation of the claim. By law, what takes place in preparation for, during and after a mediation is confidential. Nothing that takes place during this process can be used by any party against the other, so the parties can candidly discuss their views of the case and settlement. It is a far less expensive and risky way of resolving any dispute, including UM/UIM claims.
Arbitration involves the presentation of the case to an arbitrator much like a trial. There is no jury and the arbitrator performs the same function as a judge, and also the jury as a finder of fact. An arbitration is conducted in a private office, not in a courthouse. While it is informal in the sense that all the formalities of a court trial are not followed, it is a formal proceeding in that it follows the usually format of a trial. The presentation by both sides follows the normal court trial process: briefs are filed, exhibits presented, opening statements are made, witnesses are called (lay and experts such as medical witnesses), and when all parties have rested (i.e. finished their evidentiary presentation), the lawyers argue the case and possibly file post trial briefs.
The arbitrator then decides the case usually taking some time to review the evidence and the briefs. The decision of the arbitrator is usually written and is called an “award.” Once it is served on the parties, it can be converted to a court judgment, which then is enforceable against the defendant insurance company if the award is not promptly paid. If the award is for money in favor if the insured (it can be a zero which means the insurance company owes nothing), it should be paid promptly. Since tje arbitrator’s decision is final, there is no appeal, so to this extent it is an expedited process. If the insurance company does not promptly pay the award, it may be in “bad faith” which means the insured has a second suit for this delay or failure to pay as a separate claim.
In addition to representing our clients, Mr. Kornblum also serves as an expert witness in insurance claims and legal malpractice claims, and as a mediator. For more information contact our San Francisco office at 415-440-7800.