Dealing With A Disputed
Insurance Claim
Why do insurance companies deny legitimate claims?
Insurance companies deny claims because, quite frankly, it's in their best financial interest. They know that time is on their side and that most people don't have the resources necessary to sustain themselves over the long term. As well, people who face years of delays in receiving benefits will often drop their claim, or they will compromise and accept an unfair settlement, just to bring an end to the overwhelming ordeal. This reduces the insurer's liabilities and increases their profits—certainly a logical incentive for them to deny any claims, legitimate or otherwise.
Why do people whose claims have been denied not pursue legal remedies?
There are a number of reasons as to why people do not pursue legal remedies. For instance, they know that they would be unable to withstand the financial hardship and emotional distress that would likely occur. Many people in this situation simply give up and return to work ill, while others are forced to compromise and accept an unfair settlement. The expensive legal fees and court costs also prevent people from pursuing legal remedies, especially if the value of their claim is deemed insignificant, or the cost involved to litigate their claim exceeds the potential for recovery. Of the countless number of claims that are denied each year, the majority are either dropped or go unchallenged. Of the claims that are disputed, about 98% are settled out of court, but typically with a great deal of compromise on the part of the claimant.
How long does it normally take for a disputed insurance claim to be resolved?
Like most people, you may not be aware that a disputed insurance claim typically takes three to five years to be resolved. However, if a claim is settled in court and a judgement or punitive damages are awarded, the insurer will likely appeal that decision and the person may be forced to wait another two to three years before receiving any money. For most people, it would be impossible to live without an income for three months, let alone three to eight years.
Do all insurance companies treat their claimants in the same manner?
In fairness to the insurance industry, many companies make a sincere effort to treat their claimants with respect and they do honor their commitments, especially if a claim is of a short term nature or a lessor dollar amount, but that's not always the case. If it appears that a disability is going to be longer term or permanent, or if the insurer may have to pay out a large settlement, some companies will flex their financial muscle and use almost any means possible to avoid paying the claim, including questionable tactics, and taking full advantage of the legal system.
If you became disabled, would your insurance company pay your claim?
Although you might believe that your insurance company is on your side and that they will come to your financial aid when you need them the most, this may be nothing more than wishful thinking. In fact, there is a very good chance that if you were to file a claim for long-term disability benefits, you would find yourself in a battle against a formidable opponent who will stop at almost nothing to attain their objectives. This typically happens when a person is least prepared to deal with it, both financially and emotionally, and insurance companies know this all too well!
What might happen if your claim is denied?
If your claim is denied, the insurer will likely begin a process aimed at wearing you down, hoping that you will drop your claim or settle for a fraction of what you would otherwise be entitled to receive. They typically do this by creating an atmosphere in which you become angry, disheartened, confused, worried and financially destitute. In other words, on the verge of physical and emotional exhaustion—and economic disaster!
If your claim is denied, you only have three options:
- You could attempt a return to work or face financial ruin—assuming you are able to work.
- You could give in and accept the insurer's offer—assuming there is one.
- You could try to borrow enough money to live on and keep fighting—but from whom and at what cost?
Would the insurance company eventually make you an offer to settle?
In most cases, the insurance company will eventually make you an offer to settle, but typically, only after several years have gone by and you have likely exhausted all of your financial resources and are eager to settle. They will then offer you a percentage of what they owe you. This is because time is on their side and they know that if you are like most people, you don't have the resources to sustain yourself for very long. The reality is, the majority of people today are only a paycheque or two away from financial disaster! By the time the insurer finally makes you an offer, they know you are financially desperate and emotionally exhausted to the point that you will compromise and accept their unfair offer, just to bring an end to the overwhelming ordeal. This however, may only create another problem for you and that is—where will the money come from when your settlement runs out?
"The majority of people today are only a pay cheque or two away from financial disaster!"
How can you know if a settlement offer is fair and in your best interest?
The insurance company's objective is to pay out the least amount possible, and so before accepting any offer, you must first determine if it is in your best interest. To do so, you will need to calculate how much money you need to meet your current living expenses and maintain your normal standard of living, and how much money you will need to meet your future obligations. You may need to engage the services of an accountant or financial planner to assist you with this process, or one of our advisors can help you. You would also benefit greatly from the assistance of a lawyer who specializes in litigating insurance claims and personal injury cases, because without their help your chances for success in a fight against an insurance company are minimal at best. The problem is: hiring the right lawyer may prove to be no easy task!
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