An insurer violates the policy when they fail to meet one or more of their obligations set forth in the policy. They violate the policy when they provide substandard service, care and treatment, fail to honor claims filed on the policy, or apply illegal discriminatory practices.
In most cases, an insurer violates its own policies rather than a consumer’s rights. Actions of an insurer that violate policy can be legal or illegal.
If an insurer violates a policy and the insured suffers a loss due to this breach, the injured party can sue for damages. However, there is some ambiguity in the law about whether an individual has rights to sue for illegal actions of the insurer.
Plaintiff to recover economic and non-economic damages
An action for violation of policy is a tort claim that allows a plaintiff to recover economic and non-economic damages, including punitive damages if applicable. In most states, plaintiffs have three years from the date of injury to file their lawsuit and up to fifteen years from the date of injury to collect compensatory damages such as medical bills, lost wages, and pain and suffering. However, in some jurisdictions (such as California) the statute of limitations is much shorter, usually one to three years from the date of injury.
If a plaintiff sues for violation of policy and is successful, the court will award money damages to the injured party such as medical bills for the patient and non-economic damages such as punitive damages.
What if statute of limitations expires?
When an insurer violates a policy and someone sues for it, some states have statutes of limitations that limit when a lawsuit can be filed. If a lawsuit is filed after the statute of limitations expires, it will be dismissed. When a lawsuit is dismissed, the plaintiff doesn’t get to sue later.
In most cases an insurer will plead that it does not have to fulfill its obligations on the policy because policyholder failed to pay premiums and because the insured did not adhere to the other conditions of the policy. Usually insurers make their case within two years from their failure to fulfill their responsibilities under the policy or three years from when they should have fulfilled them if they didn’t do so in time.
If everything works in favor for a plaintiff, he or she can win the case even if insurer’s arguments are correct.
Awarding for economic, non-economic damages and some illegal practices
In many states, the injured person may have a cause of action for violation of policy even if damages are not awarded. Courts in some states will only award damages to a plaintiff if they suffer economic damages. In other states, courts will award economic and non-economic damages. If a plaintiff wins their case without having to prove economic damages in court, they still have the right to sue for non-economic damages such as punitive damages and attorneys’ fees.
Many lawyers send out letters with misleading information about an insurer’s obligations after the policy expires. They threaten to sue the insurer if they do not respond to the letter, which may lead to an investigation and possible lawsuit. This practice is illegal because it is abusive litigation.
How a person can be successful in their claim for violation of policy?
In order for a person to be successful in a claim for violation of policy, he or she must have proof that the insurer has violated his or her policy. One of the best methods for proving this is through an audit of the filed claims against an insurer’s profits.
Insurers must report their revenues from premiums and reimbursements from claims paid out. Lawyers use this information to determine if an insurer has violated a policy.
The information about insurers’ profits can be obtained by requesting annual reports from states and by looking at the financial disclosure reports of corporations that are regulated by the Securities and Exchange Commission (SEC). However, not all states publish their insurers’ profits annually.
Importance of Notice of Claim Filing
If an insured files a lawsuit for violation of policy, the plaintiff should send a Notice of Claim Filing to the insurer within sixty days. A Notice of Claim Filing must contain certain information such as contact information which includes physical address as well as fax number, email address, and mailing address.
The Notice of Claim Filing must include a claim number and payment amount.
In most states the failure to give a Notice of Claim Filing within sixty days of filing a lawsuit for violation of policy will result in the dismissal of the case. In other states it can result in the plaintiff suing an insurer outside the statute of limitations.
What can an insured person do if an insurer violates the policy?
If an insurer violates the policy, there is no one way to proceed against them. A claimant can choose to sue on his or her own or through a third party. An injured party may be able to sue on his or her own if he or she has suffered economic damages and someone else can’t recover the loss.
- Everything about Insurance Endorsement
- Longevity Insurance benefits: Why you should consider it?
- Can you still get insurance if you have a pre-existing condition?
There is no rule of thumb we’ve written on stone when it comes to what to do when an insurer violates policy.
However, here are some things you can do:
- If you do not want to engage in a lawsuit against your insurance company, you can send a letter to the insurer stating that they have violated policy and that you are entitled to compensation.
- You can hire an attorney and sue the insurance company in court, or let them know that you have hired an attorney.
- If you are dealing with a large company or corporation and they refuse to negotiate, you can add them as a defendant to your claim for damages in order to put pressure on them.
- You can also hire an attorney who will handle your claim on a contingency. Your attorney will not take any money from you until he or she wins the case and gets damages for you.
- You can make a report to the insurer’s compliance department about their actions towards you and follow up with a letter to their legal department if you don’t get a response from the compliance department in 60 days. At this point it is common practice for insurers to conduct their own audits of their claims data first, before deciding whether there are grounds for denying your claim altogether.
- You can request that your insurer conducts an audit of their claims data to verify whether they have actually violated policy. If they already conducted an audit, you can request that they conduct another audit to make sure they haven’t missed anything.
7. You can make a complaint with your state’s insurance commission and the state attorney general if you feel that your insurer has handled matters inappropriately. If your attorney made a report to the compliance department and did not get a response in 60 days, you should also contact the compliance department and follow up with a letter to the legal department if you don’t get a response from them in 30 days.
To conclude, it is important to keep in mind that there are no hard and fast rules when it comes to filing claims. You should take your time while making a decision and do not be afraid to contact an attorney if you have questions.