A common question in insurance issues concerns what an insurance dispute is and if it fits their situation. Dealing with insurance can often be a pain, and when an insurance claim goes wrong, people may wonder how to recover from the denial or other agreement that does not match what the policyholder hoped for. Insurance disputes are a less regulated type of dispute process and can often involve self-advocacy and alternative dispute resolution as the policyholder attempts to reconcile their needs with the insurance company. When a dispute arises, there are a few ways that a policyholder can look to enforce their rights, and this article will discuss the ways that people can advocate for their needs. It will explain what an insurance dispute is, how a claim is typically handled and wherein this process a dispute may arise, point out several types of disputes that may arise, and finally provide tips on how to resolve an insurance claim.
Insurance Dispute Explained:
Before beginning the discussion on the claim and dispute resolution process, it is important to understand just what an insurance dispute is. An insurance dispute is what arises when a policyholder is unhappy with a decision that the insurance company has made concerning a claim or policy. This may sound vague, but the place in the process where the dispute arises or how the dispute happens covers a variety of issues and different types of disputes, which will be discussed below. These disputes will often disrupt a person’s life and cost them a lot of money if they are not resolved effectively, as the thing that insurance covers are often expensive and not expected or budgeted for. For these reasons, it is important for the policyholder to effectively resolve the dispute and collect on their claim.
Common Claims Process:
Because many insurance disputes arise surrounding a claim, it is important to consider the typical process of an insurance claim and the areas where a dispute may arise. The typical insurance claim will follow a path similar to the one below. The steps in the process include:
- Claim: The process will begin when the policyholder files a claim. What the claim is will depend on the type of insurance that the claim is being made to. However, it will likely be that the policyholder suffered some sort of loss or damage to an interest that is protected by the insurance policy. The policyholder will send the claim for the loss or damage to the insurer. It is fairly unlikely to see disputes this early in the process.
- Assignment: Once the insurance company receives the claim, they will assign the claim to an insurance claim professional that will help the policyholder navigate the claim. Again, there are very few, if any, disputes that will arise during this step.
- Contact: After it is assigned, the claims professional will reach out to the policyholder to help gather more information about the claim. This could be more information about the damage, how it happened, exactly what was damaged, and ensuring that the person making the claim has the right to. At this point, minor disputes may arise if the policyholder and the claims professional do not work well together. Another issue that could arise is that the claims professional states that the person making the claim is not the policyholder that is authorized to make the claim or that the claim is not covered by the policy.
- Evaluation: After the information is gathered, an insurance adjuster will evaluate the damage or loss suffered. This is where the policyholder presents any evidence that they may have, and the adjuster will evaluate the evidence, do their own investigating, talk to any witnesses, and gather anything needed to determine whether the claim is covered. Some disputes may arise if the evaluator is not considering all the evidence that the policyholder has or the witnesses are not questioned. However, the policyholder may not be aware of the issues at this time until they receive the evaluator’s decision.
- Resolution: After the evaluator completes their investigation, they will create a decision on how much of the claim should be paid out. This is where the majority of the disputes will happen if the evaluator does not give the policyholder the amount that they claimed or denies the claim for any variety of reasons.
- Closure: Once payment has been made or the claim was denied, the claim will be closed. Disputes here will likely flow from the disputes that arose in the resolution phase.
There are several instances where the parties may end up with a dispute; however, if there is no dispute, the process is fairly straightforward.
Types of Insurance Disputes:
Another important aspect of the dispute is the type of dispute that arises, as it will help the policyholder determine how to handle it. There are several types of disputes that may arise, which can be divided into disputes that can arise regardless of the claim being denied and those that arise as a result of the claim being denied. First, consider these disputes that could arise regardless of the denial of the claim:
- Pricing: Some disputes may arise if as a result of the claim, the premium price increases. This is a common insurance practice, but it may cause a dispute if the party that is making the claim feels that it is unjustified as there was no fault in the claim.
- Coverage: Similar to pricing, the policyholder may dispute any changes in coverage that may arise. This can happen either as the result of a claim or just as the coverage changes as a part of company changes across policies.
- Misunderstandings: Disputes will arise commonly as a result of misunderstandings between the policyholder and the insurance company. This can be over a variety of things.
- Lapse: Another common dispute will arise if the policy was able to lapse without proper notification to the policyholder. This can cause issues if the policyholder goes to file a claim and finds out that they do not or did not have coverage when the claim arose.
The other common disputes arise when the claims are denied. These include instances where:
- Outside Coverage: Occasionally, there will be disagreements about whether the losses claimed are covered by the insurance.
- Value: Occasionally, the policyholder and the insurance company will disagree over the value of what is claimed.
- Responsibility: The claim could be denied because the evaluator believes the policyholder is partially or fully responsible for the damage.
In any of these instances, the policyholder will likely dispute the claim or change.
How to Dispute a Claim:
The process of disputing an issue with insurance is fairly straightforward. First, the policyholder should research the rights and laws surrounding the dispute and contact the insurance company to make them aware of the dispute and their rights. The policyholder will likely be able to talk to the adjuster who made the determination, who will explain the issues with the claim, and note any disagreement. After this phone call, it is important to send a letter outlining the same points to create a receipt of the dispute. The parties may attempt alternative dispute resolution if possible. If this dispute is not resolved, it can usually be reported to a state office, which will usually involve filing an official complaint. At this stage, it may be beneficial to contact and retain a lawyer to further protect their rights. Disputes are commonplace in the insurance industry, but knowing how they arise and what to do when encountered with one can help the policyholder feel empowered to fight for their rights and receive the claims that they so desperately need.
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