Businesses that are adding or renewing insurance policies need to be aware that insurance companies are constantly changing the rules of the game. The ironclad rule of the insurance business is that insurance companies do not like to pay claims. When doing so begins to harm their bottom line, they begin to change the rules of the game to skew the playing field in their favor. For your business, this can mean denials of coverage, non-renewals of policies, and rising premiums.
Insurance companies have been faced with a multitude of disasters and challenges on all sides. Claims are up in many regions of the country. The recent ice storms in Texas have left insurance companies facing even more claims than they did after Hurricane Harvey.
Between the confluence of hurricanes, flooding, and wildfires, businesses are losing tens of billions of dollars, and they are expecting insurance companies to make good on their policies. Cognizant of the losses, insurance companies fall back on their tried-and-true business methods to keep up their own profits.
How Insurance Companies Deal with Rising Numbers of Claims
There are three primary tools that insurance companies have in their toolbox when they are asked to pay too much in claims. They are:
- Raising prices to factor in the increased risk
- Drafting new policies with more exclusions to keep them from paying certain types of damages
- Aggressively denying claims and forcing the insured to fight for the compensation to which their policy entitles them
In general, there is less wrong with the first two options on the above list. Insurance is a business, and you can expect companies to charge you more when the risk has increased. After all, insurance companies are in the business of pricing risk. If there is more risk, companies should pay more.
In addition, insurance companies have the right to draw up a contract to include policy exclusions, just as businesses have the ability to shop around for a policy that includes the coverage that they need. Nonetheless, businesses need to be aware of how insurance companies are changing the rules of the game as it goes along. Just because your policy included certain coverage in the past does not mean that it is in your present policy. Issues like these make it advisable to have an attorney review your business coverage before you sign the policy to avoid unpleasant surprises in the future. The last thing that you want is to make a claim on your policy assumed you have coverage, only to find out that you never had it in the first place.
You Can Sue for a Wrongful Denial of Your Claim
When an insurance company attempts to protect its bottom line by aggressively denying claims, it may cross the line into breaching its contracts with its policyholders. When your policy promises you coverage, your insurance company should honor that promise. Whenever your claim is denied, your first call should be to an attorney to see if the refusal to pay is a violation of your contract. Sometimes, you may need to take the matter court to force the insurance company to pay you what you deserve. Not only can you force them to pay, but you can also sue the insurance company for a bad faith denial of your claim.
In a climate where insurers are trying to cover their losses, the best thing that you could do for your company is to be vigilant. Thoroughly review every policy and do not hesitate to try to negotiate better terms. If you cannot get the coverage you want from a policy, make sure to shop around until you find the policy that works for you. When it comes to an insurance policy, words matter, and the insurance company knows exactly what it is doing when it drafts the policy.
In the end, you may not be able to find an insurance policy that covers everything that you want. Nonetheless, making comparisons between policies and trying to negotiate is more important than ever. In addition, getting legal counsel to aggressively defend your rights is becoming increasingly critical because you can count on more claim denials in the future.
Contact an Insurance Coverage Attorney Today
In the current climate, it’s a good idea to work with an attorney before entering into a business insurance contract. Attorney Michael J. Faul at Herold Law is an experienced insurance attorney and litigator with decades of experience in helping businesses. Call us today at (908) 647-1022 or contact us online to schedule a consultation.