Insurance Company "Tricks of the Trade" l Seattle Personal Injury & Insurance Claims Attorney

The American Association for Justice (AAJ) recently issued a report describing ways the insurance industry attempts to make money at the expense of consumers and policyholders.  AAJ reports on these "tricks of the trade" - the ways insurers try to cheat consumers:

1. Denying Legitimate Claims - many companies utilize a policy of actually denying legitimate claims.  Many people accept the denial, saving the industry millions.  Still others hire an attorney, causing more expense and delay.

2. Delaying the Claim until Death - many carriers routinely delay claims, especially long-term disability carriers.  Many states have laws in place that extinguish certain damages when the claimant dies.  So by delaying the claim until an older and ill person dies, the company can save a lot.

3. Confusing Consumers - have you ever had to decipher a standard insurance contract?  If yes, then you know how incredibly complex, dense and incomprehensible these policies can be.  After Hurrican Katrina, many policyholders thought they were covered for this loss only to find out that the insurance companies relied on a rarely used and obscure clause to deny coverage.

4. Discriminating by Credit Score - many companies now use credit scores to determine the amount of the premium the policyholder must pay.  The practice penalizes the poor and elderly who have little credit.  Some consumers have seen their auto insurance increase for an accident that was someone else's fault.

5. Canceling Coverage for a Small Claim - many people refuse to file a small claim after they have heard that the insurance company has dropped others from coverage for doing so.  Sometimes a company will drop an insured based solely on a telephone call inquiring over whether a claim even exists.

You can download and review AAJ's report here. 

The report describes several examples of how insurance companies will engage in unscrupulous tactics to take advantage of people and pay out as little money as possible.