"In your policy it states quite clearly that no claim that you make will be paid.
You unfortunately plucked for our Never-Pay Policy, which if you never claim is very worthwhile - but, uh, you had to claim - and there it is.
" --Mr.
Devious to Reverend Morrison about the letter from the insurance company refusing to pay the Reverend's claim for damage to his car that was hit by a lorry while standing in a garage.
Monty Python and the Flying Circus, circa 1971.
It seems impossible to watch five minutes of television without being bombarded by insurance commercials, whether featuring a talking gecko, cavemen, "Flo" with the nametag, a Benji-like dog losing sleep over worries about his bone, or the dulcet tones of actor Dennis Haysbert (he does have an amazing voice) asking whether you are in good hands.
Although many of these commercials focus on saving money, they also promise you will be well treated if there is ever a claim.
You are told you will be treated like "a good neighbor," will experience "concierge claim service," or will be in the aforementioned "good hands.
" It is not surprising that insurers spend millions of dollars portraying themselves in this manner.
After all, what insurers are selling is the promise of protection.
Insurance is a product that you hope never to use, but, when you need it, you expect and need it to be there.
Please be assured that I am not anti-insurance.
If you have read my firm's blog or other articles on ezines, you know that I encourage businesses to establish a relationship with a good insurance broker, to put a good insurance program in place, and to review that insurance program regularly.
Nevertheless, a large part of my practice involves representing policyholders (typically commercial policyholders) when insurance companies will not pay their claims.
I'm talking about liability and property damage claims, not health care and other types of claims.
Maybe it is just my little part of the world, and maybe there are carriers out there behaving properly and paying claims, but my recent experience suggests that insurers are reserving rights and contesting claims with renewed vigor.
Many insurance companies, quite frankly, seem to act as if they were in the business of selling "Never Pay" policies.
(This is not meant to suggest that the aforementioned advertisers necessarily fall into this category).
If my recent experience does represent a larger reality, it bodes very badly for business.
In fact, it bodes very badly for society in general.
Small business is the backbone of our economy, and, if we are to recover from the current economic woes, small business will lead the way.
Small businesses, however, can literally be wiped out a single claim if their insurance company does not pay.
In this regard, it should be remembered that the typical liability policy makes two fundamental promises by imposing two fundamental duties on insurance companies.
The first duty is the duty to defend.
This means that, if you or your company is sued, the insurance company must appoint and payfor a lawyer to defend the case.
If the insurance company refuses this fundamental duty, the cost of paying for a defense can impose a huge burden on a small company.
The second duty is the duty to indemnify, which is the duty to pay settlements or judgments to resolve the claim.
Buildings and lives cannot be rebuilt if insurance companies do not pay claims.
Injured parties will not be compensated if insurance companies do not pay claims.
In short, business depends on insurance companies keeping their promise of protection, and, to some significant extent, society does as well.
It is my sincere hope that one of these days a carrier will come along with a new business model.
First, this carrier will write policies that ordinary people can understand that clearly state what is covered and not covered.
If an insured needs additional coverage, the insured will be able to buy additional coverage for the risk.
This carrier will hire claims adjusters that focus on fairly paying losses, rather than writing reservation of rights and denial letters.
This carrier will have little need to hire a legion of insurance coverage lawyers flying around the country pressing litigation against the company's own customers and trying to deny clams.
This carrier will value its customers and treat them right if there is a claim.
Any doubts will be resolved in favor of the insured.
This carrier will have no need to pay millions or hundreds of millions for clever advertising campaigns.
Its reputation will spread like wildfire and its business will grow and expand not because of what it says, but because of what it does.
This article has defined the problem and posed a Utopian solution.
Unfortunately, our mythical perfect carrier is likely to remain a myth, at least in the foreseeable future.
For now at least, we have to deal with the real world.
There is unfortunately no way to make sure that a carrier will treat you right if you have a claim.
There are, however, ways to increase your chances of an acceptable outcome.
In the next article, I will cover a few tips that may help you avoid the "Never Pay" policy.