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Q: My private disability income insurance company has wrongly rejected my claim. What rights do I have as a policyholder?
When an insurance company refuses to honor a legitimate disability claim, it has broken its legally binding agreements under the policy. You are entitled to sue for breach of contract. If the company acts underhandedly, you could sue for added damages for their bad faith misconduct.
The primary interest of private income insurance companies is to generate and keep as much revenue as possible. To protect their bottom line, many companies try delaying, undervaluing, or flatly denying policyholder claims. Unfortunately, some will even devise bad faith ploys to avoid or reduce the payout of benefits to which a policyholder is entitled.
If your insurer undervalues or denies your disability claim, you do not have to give up. You faithfully paid hefty premiums for this policy, and you should discuss your legal rights and options with an expert policyholder attorney. Many individuals who persevered past initial delays and denials eventually won sizable settlements and verdicts with the help of experienced attorneys.
Q: What is bad faith, and what are some examples of it?
Most states define bad faith as unethical or inequitable behavior on the part of an insurer. An insurer may be acting in bad faith if it employs:
If your insurance company has acted in bad faith, it may be liable for damages beyond the limits of the policy. Although the kinds of damages you may pursue in a bad faith suit differ among the states, they may include economic loss, emotional distress, contract damages, punitive damages, and more.
Q: Must I accept my insurer’s definition of a policy term?
A: Quite often, insurers will deny a claim based on their interpretation of the wording of the policy. An all-too-common move they make has to do with the distinction between “any occupation” and “own occupation”. “Any occupation” insurance provides coverage for individuals who are unable to work in any job that would fit their experience, education and skill set. “Own occupation” insurance provides benefits for people who cannot carry out the work responsibilities of their profession.
You do not have to accept your insurer’s definition if it is unfair or unfavorable to you. Courts understand that insurance policies can be quite intricate and ambiguous. When they analyze the definitions of vague insurance policy terms, courts usually endorse a definition that favors coverage to the policyholder.
As a policyholder, you have definite rights. You do not have to allow an insurance company to misguide you or convince you not to pursue your legitimate disability income claim. Consult with an attorney that is knowledgeable of the gimmicks insurance companies use to avoid paying out disability claims. A reputable, competent lawyer will: