How Insurance Companies Are Boosting Profits with New Hail Settlement PracticesJanuary 17, 2017
Insurance companies like all commercial entities are in the business of making a profit. This comes down to increasing revenue while decreasing expenses. Some insurance companies will resort to any means necessary to reach profit goals. The insurance industry works by selling a contract to cover specified risks to clients in exchange for periodic payments called premiums.
The most common way for insurance companies to obtain profits is to maximize the premiums they receive while minimizing the amount paid out in claims. These tactics include denying, underpaying, or delaying payment of those claims. In other words, like all profit-driven businesses, insurance companies’ main goal is to receive as much income as possible and pay as little in claims as possible. Likewise, if an insurance company delays payment on a claim, the company is also able to generate interest income.
Another common practice of insurance companies is to hire private consultants who help the insurance company with settling their claims. Over the last few years, consultants have changed the processes insurance companies use to determine settlements by designing a new method of settling claims. As a result, claim values in recent years has fallen dramatically. Many insurance companies have been cited for their unfair claim settlement practices aimed at unjustly lowering settlement value to boost their profits. In order to combat these unfair practices, it is important for property owners and contractors to know how they happen in hail claims. Some of these practices include:
- The insurance company tells you that you intentionally caused the damage to your roof or the damage to your roof was caused by normal wear and tear. Most policies have exclusions for normal wear and tear.
- The insurance company will tell you that the property damage you have sustained does not meet your deductible or is so insignificant it only requires minor repairs if any at all. Then, the insurance company will proceed to make you a lowball offer leaving you to cover the rest of the repair. This is a classic underpayment scheme in which the insurance company manufacturers an excuse to offer substantially less than what the claim is worth.
- The insurance company falsely tells you that you missed the deadline to file your claim and report the damage, so they deny your claim.
- The insurance company delays payment on your claim with the expectation that you will give up on your claim, thus saving the insurance company payment of your claim.
- The insurance company tells you that when the hail storm hit, your insurance policy was not in effect, so they tell you that they are not paying your claim.
- The insurance company tells you that the damage you sustained on your roof was already there before the storm and/or was not caused by hail.
- The insurance company fails to properly investigate the damage to your home and bases its settlement offer on an inadequate investigation. An insurance company must properly investigate and assess damage for a claim.
- The insurance company quickly offers a lowball settlement in order to force financially burdened policyholders into settling for significantly less than their policy is worth.
The best way for property owners and contractors to deal with an insurance company is to understand how insurance companies operate, which is to generate more revenue while limiting their payouts. The more you know about their practices, the better prepared you will be to deal with your insurance company. If your insurance company has acted in bad faith by underpaying, delaying, or denying your valid claim, contact us for a free consultation.
The attorneys at the Amaro Law Firm have vast experience dealing with insurance companies. In fact, some of their attorneys worked as insurance companies defense lawyers before joining the firm. Now, they help property owners fight for fair and just treatment. Our consultations are free. If we cannot add value to your claim, we will not take your case. We are only paid if we win your case by converting your denied or underpaid claim into a fully paid claim. Contact us today for your free consultation.