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Insurance Fraud: Common-Sense Advice to Protect Consumers

Posted By Regan Zambri & Long || 17-Nov-2008

 The term "insurance fraud" is usually attributed to the consumer but a recent article by the American Association for Justice has outlined an increasing problem of Insurance companies committing the insurance fraud.

We learn from an early age that everyone needs insurance. Most people view insurance, whether it be life, car, or home owners, as a necessity. With more and more people putting their faith in the hands of insurance companies, shouldn’t we expect to get what we are paying for? The American Association for Justice article exposes how insurance companies may be exploiting people hope for security.

The article outlines the following 6 ways in which insurance companies cheat their customers out of money and benefits.

  •  Denying Claims
    • Many claims are simply being denied whether they are valid or not. In fact, many insurance companies are rewarding those employees who deny the most claims.
  • Delaying Until Death
    • In some situations where a customer has a valid claim but may be terminally ill, the insurance company will find many different ways to delay paying out the bills in hopes that the client dies before they have to pay the bills. A former Conseco agent was quoted as saying "[The insurance company] made it so hard to make a claim that people either died or gave up"
  • Confusing Consumers
    • Many insurance companies use extremely difficult industry relevant language that even attorneys struggle with. This of course is no coincidence. If you can’t read it, you can’t understand it. This is so problematic that half of the states have enacted a "plain English" law for consumer contracts.
  • Discriminating by Credit Score
    • It doesn’t matter if your credit score is no fault of your own, more and more insurance agents are increasing rates for those people who have poor credit or little credit. This is effecting the elderly because many of them try to pay for everything up front.
  • Abandoning the Sick
    • Certain companies have refused coverage for customers once they become sick claiming the patient didn’t fill out their paperwork correctly or offering some other minute complication as an excuse to revoke coverage.
  • Canceling for a Call
    • Although it may seem like a good idea to call your insurance provider before filing a claim, to make sure you are covered under certain circumstances, it may be a poor choice. Some companies have been known to cancel customers policies if they even suspect you have a claim.

As outrageous as these tactics may seem they do occur and at an alarmingly high rate, especially when a disaster occurs that affects a large number of people such as hurricanes and earthquakes.

It’s not just the small insignificant insurance companies that are cheating the customer, it’s the major companies too. Farmers, Allstate, AIG, and State Farm are just a few of the major players that have been making money at their customers’ expense.  They’ve been successful, as estimates indicate that between 2003-2006 the industry as a whole profited an extra $67 billion dollars from these tricks alone.

You may be asking yourself, why are all of these consumers falling for this? Many of us feel that our insurance companies are on our side, they are there to protect us and give us peace of mind. Unfortunately though, the insurance industry operates as a money making corporate structure and our best interest is not theirs.

Most of us still need insurance, no matter how undesirable the prospect of dealing with the companies is. As a result, it is important that we take extra precaution to protect ourselves from falling victim to these "tricks of the trade" as the article refers to them as. The following recommendations were provided by the American Association for Justice:

  • Read your policy carefully
    • You should know exactly what you are paying for. It is also recommended that you find out how to appeal a denied claim. Make sure you read everything before you sign!
  • Be very careful filling out forms
    • Make sure you are satisfied with your insurance company’s decision on a claim before cashing a check. If you cash the check, the insurance provider may deem that as an acceptance of their decision and you may not be entitled to any more money.
  • Put everything in writing
    • Calling your provider may lead to detrimental results. Make sure you have a paper trail of all dealings with your claims, no matter how insignificant they may seem. Make sure to keep all bills, records, and correspondence.
  • Contact your state insurance department
    • This is a good neutral source in case you are concerned your provider is trying to scam you. However, they will not be able to represent you so if the case does not get resolved, it may be necessary to contact an attorney
  • DO NOT GIVE UP!
    • Insurance companies profit from this and count on their customers to give up. It is your right to receive the service you’ve been paying for. Although it’s a hassle to persevere, it will be worth it in the long run.

Previously on the DC Metro Area Personal Injury Law Blog, we have posted articles related to:

For information about your legal rights, please click here or call the law firm of Regan Zambri & Long, PLLC at 202-759-6699.

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