If you are involved in a dispute with your insurance company, you may ultimately face a choice between settlement and litigation. Since negotiating a settlement provides both sides with several advantages over litigation, the vast majority of insurance disputes are resolved this way. However, depending on the facts and circumstances of your case, it may be in your best interest to pursue litigation. An experienced insurance law attorney can help you make an informed decision about the best strategy for achieving a favorable outcome based on your case and your objectives.
When Your Claim Is Denied
If your insurance company denies or limits your coverage in violation of your insurance agreement, you can fight back first by negotiating directly with the insurance company. The insurer will notify you in a disclaimer of coverage letter of its reason(s) for the denial. Based on these listed reasons and a careful review of your policy and your previously submitted claim, you can draft a letter to the insurance company that provides a compelling, thorough argument of why you are entitled to coverage. Include the facts of the situation and any additional relevant evidence that you did not include with your initial submission. When presented with new evidence, an insurance company has a good faith obligation to reopen a claim and reconsider its decision.
If direct negotiation fails, consider hiring an experienced insurance lawyer to negotiate with the insurance company on your behalf. An insurance law attorney can often resolve disputes with insurance companies without the need for litigation. An attorney letter that incorporates compelling factual and legal arguments supported by evidence may convince the insurer to reverse its position and fully cover the claim in order to avoid the risk of costly litigation.
Negotiating a Settlement
If the insurer refuses to fully cover the claim, your attorney can attempt to negotiate an acceptable settlement on your behalf. Settling the dispute and avoiding litigation offers several advantages. Most significantly, it allows you to avoid the high cost of protracted litigation, which includes attorney fees, court costs, document production and often expert witnesses. In addition, the settlement option generally offers a much speedier resolution of your dispute. Unlike a trial, which could extend for months or years, settlement negotiations often lead to a resolution within weeks or months, allowing you to secure your payment and put the matter behind you more quickly.
Another critical advantage of a settlement is that it allows you to avoid an unknown verdict at the end of trial. Even compelling evidence does not guarantee victory, and a settlement allows you to have some control over the outcome. For policyholders who prioritize certainty over risk, a negotiated resolution can provide valuable peace of mind.
When Settlement May Not Be Appropriate
Although settlement offers many advantages, in some circumstances it may not be in your best interest to accept the insurer’s final offer. Insurance companies frequently undervalue the cost of a claim. If the insurer’s settlement proposal fails to adequately compensate you for your covered losses, accepting the offer may leave significant value on the table. A thorough assessment of your damages should occur before any settlement decision is reached.
In some insurance disputes, the insurer’s conduct may give rise to allegations of bad faith. Many jurisdictions recognize claims for insurer bad faith in certain circumstances, such as when the carrier unreasonably denies benefits, fails to investigate claims properly or engages in unfair settlement practices. If bad faith allegations are successfully proven, you could be eligible for punitive damages on top of compensatory damages. For a case involving bad faith allegations, pursuing litigation could potentially offer you a sizable upside. However, the threat of bad faith exposure may entice the insurer to offer you a lucrative settlement, which would allow you to avoid the cost and time of a trial and the unknown outcome at its conclusion.
If you are involved in a dispute with your insurance company, an experienced insurance law attorney can advise you on the best strategy based on the facts and circumstances of your case and your goals. Your attorney will evaluate the value of your claim and the strength of the evidence supporting coverage and damages while considering applicable laws, your risk tolerance and your objectives to help you choose the best course of action.
If your business insurance company has denied or is challenging your claim, contact Schwartz Conroy & Hack, PC. We have the expertise, experience and tenacity to make insurance companies keep their promises to you and your business.
