The Dirtiest Words in the English Language Are “Post-Claims Underwriting”

By Clint Scott | April 5, 2016

The Dirtiest Words in the English Language Are “Post-Claims Underwriting”The French poet Charles Baudelaire once said “The finest trick of the devil is to persuade you that he does not exist.” This is a particular trick of the insurance industry as well, though they call it “post-claims underwriting.” In short, post-claims underwriting means this: you purchase an insurance policy. You suffer a loss. You make a claim for that loss. The insurer turns around and says, “You never should have been given this policy in the first place because you were a bad risk. We’re not paying it.” While it is bad faith for the insurer go back to your policy and somehow rewrite the claim to ensure that you cannot be paid, that does not mean that all refusals are illegal.

For example, let us say that you purchase homeowners’ insurance, and you are asked if you have had any prior insurance losses. You respond that you have not had any losses, but forgot about the hail claim you made on your car ten years ago. One night, your house catches on fire. If your response regarding prior insurance losses was not accurate, the insurance company may be able to rescind your policy.

Why some insurers “get away” with it

When you apply for an insurance policy, the company sends the policy to be underwritten by someone who is supposed to evaluate what kinds of risks you pose as a policyholder. The underwriter is the one who determines what the cost of your policy will be, or whether or not you can even get a policy. When an insurance agent misrepresents your policy, or purposely asks you rather vague questions, he or she may be setting you up to have a claim denied later.

Another reason why we may see an increase in claims being denied has to do with policyholders’ propensity for buying insurance online. Online applications are often brief and general, and when the actual application comes – which is long and detailed, and usually filled with terms that no one outside of the insurance company can understand – most people simply check the “I agree” box and move forward. After all, they understood the initial online application, so why do they need to read the longer one?

Under certain circumstances, these practices are legal. In others circumstances, they are acts of bad faith. And when they are, you do have legal remedies at your disposal to help you. If you wish to avoid these potential problems altogether, you should make sure that you understand all questions on your insurance application and that you are as accurate as possible. Also, don’t sign an insurance application without thoroughly reading and analyzing each question. If you have questions, meet with your agent and go over them with him/her, as they should be able to assist you through the document. Taking notes of your conversation with your agent may be helpful down the road if an issue arises.

McWherter Scott & Bobbitt assists policyholders throughout Tennessee whose insurers are acting in bad faith. We invite you to contact us to speak to Brandon McWherter or Clint Scott about your experiences. We have offices in Nashville, Chattanooga, Memphis and Jackson to better serve our clients throughout the region.

Posted in Insurance Disputes