Timeliness of insurance claim investigation and payment is often critical to the well-being of a policyholder. One of the fundamental “rules of the road” of good faith claim handling requires the insurance company to timely investigate, evaluate and pay claims if owed. Likewise, a company’s unreasonable, unfair failure or refusal to do so is bad faith. Unfortunately, all too often insurance companies engage in delay tactics that put their policyholders in unnecessarily difficult situations.
Under the law, unreasonable delay may be tantamount to a denial of the claim. As a result, to delay resolving the claim may be bad faith in and of itself.
Why is timeliness so important in claim handling? Oklahoma law recognizes the practicalities of the relationship between the insurance industry and the insuring public:
Among the considerations in purchasing . . . insurance, as insurers are well aware, is the peace of mind and security it will provide in the event of an accidental loss . . .’ The very risks insured against presuppose that if and when a claim is made, the insured will be. . . in strait financial circumstances and, therefore, particularly vulnerable to oppressive tactics on the part of an economically powerful entity.
Christian v. American Home Assur. Co., 577 P.2d 899, 1977 OK 141 (Okla. 1977).
Insurance companies are well aware of this law. They know they are not supposed to drag their feet and use delay as a weapon to extract cheaper claim settlements from their policyholders. But too often they do just that. Sometimes an adjuster, knowing that the policyholder could really use insurance money to restore their lives after a loss, will allow large blocks of time to go by during the life of the claim, all the while hoping the policyholder will throw in the towel and take less than a fair amount of money just to get the claim over with.
Policyholders are entitled to to prompt resolutions of their claims. Part of each premium dollar paid by a policyholder is paid for claim service – in other words, part of your premium goes to pay for the insurance company’s claim department to handle your claim. If you’re paying for claim service when you pay your premium, you should get what you pay for – actual claim service.
Sometimes, insurance companies engage in what I’ve heard referred to as “studied indifference.” In other words, the company simply ignores the claim and never makes any real effort to bring it to a conclusion because to do so requires them to be proactive. Many times, the adjuster is overloaded with the number of claims (usually in the hundreds) she is supposed to handle because the insurance company does not want to hire more adjusters. Her supervisor, in turn, is supervising multiple adjusters and each of them have far too many claims (hundreds) to handle. As a result, the supervisor is “supervising” thousands of claims. Of course, it isn’t humanly possible to “supervise” the handling of thousands of claims. But, the insurance company does not want to hire more supervisors.
In these situations, policyholders’ claims fall through the cracks. They receive no meaningful attention whatsoever from the adjuster, and the supervisor has no idea what is really going on in the claim. All the while, the policyholder is beating his head against the wall feeling as if nobody is listening and nobody cares about the fact his home is damaged or he can’t pay his medical bills. And, sadly, the policyholder is often exactly right.
Insurance claim delays can cause real pain to real people. This should never happen if an insurance company does what it knows it is required to do under the law and timely resolves claims.