When an insurance company receives a claim from its policyholder, the first thing the adjuster does is “check coverage.” This means they verify the policy is in force by making sure the premiums have been paid and the policy period is in effect. Then, the adjuster looks at the facts of the claim the policyholder is presenting to determine if the insurance policy language provides coverage for the claim.
This may sound simple (and it often is) but sometimes whether the facts of the claim are covered by the policy is not a black and white question. Often, there are shades of gray on whether coverage exists. Anyone who has read an insurance policy (or even part of one) knows they can be extremely hard to understand. It might be surprising, but this is true of lawyers, even lawyers who practice insurance law. There is a reason for this. Most insurance policies are written in such a way that they are almost impossible to understand.
Over the years, I have come to believe that insurance companies attempt to write insurance policies so that only they know what they really mean. If the language of the policy is incomprehensible and the policyholder has no idea what it really says, then the adjuster has the power to tell the policyholder what is covered and what isn’t without the policyholder being able to dispute it. Way too often, policyholders hear an adjuster say “there’s no coverage for your claim,” throw up their hands and walk away. They feel like they can’t take on the big, bad insurance company and win. This is not true.
In reality, most insurance adjusters have very little training or ability to fairly read and interpret policy language, even if they think they do. Insurance adjusters have a tendency to look for reasons there is not coverage, as opposed to broadly interpreting the policy language to attempt to find coverage. Also, adjusters often overlook the fact that the duty of good faith requires them to fully, fairly and timely investigate and even-handedly evaluate coverage questions, just like liability or damage issues. As a result, coverage denials are often based on superficial, knee-jerk readings of policy language by untrained or unknowledgeable adjusters.
Policyholders who are told there is “no coverage” for their claim should demand a written, detailed explanation of the adjuster’s position, including reference to specific policy provisions the adjuster says preclude coverage. Then, if the policyholder has questions, they should contact an experienced lawyer to help them understand their rights.