Today we start a three part series addressing the best strategies that policyholders can use to reverse business insurance claims denials. In this post, Miller Friel co-founding partner Mark Miller explains that the first, and perhaps the most important step, is to understand that the overwhelming majority of claim denial letters are false. The video addresses the primary purposes of claim denial letters, and a more sinister trick that lies within claim denial letters that needs to be heeded to preserve coverage.
Watch the video to learn more.
For a transcript of the video please see below
Reversing Insurance Claim Denials Part 1: Don’t Believe Claim Denial Letters
Point number one, don’t believe it. Now, sounds a little bit of a bold and strong statement, and it is, but don’t believe the denial for a number of reasons. Here’s what’s happening behind the scenes when businesses submit a claim. The claim goes to the insurance company. The first thing they do is look at and see how significant it is. Is it a lot of money or is it a little bit of money? If it’s a little bit of money, it goes to one place. If it’s a lot of money, it goes to the place where they give it to their outside lawyers, so if you’ve got a claim north of $500,000 million, those claims are being submitted to outside lawyers immediately for evaluation.
What do those outside lawyers do? Well, they have a whole series of letters they’ve worked on over the years with their clients to set forth a basis to deny these types of claims, and those letters will list cases, they’ll list facts, they’ll go through the allegations, and they have a set way of doing this. If you read enough of them, you’ll realize they’re all the same. They’re all really the exact same format, the only difference being sometimes they’ll pull a case log from here, sometimes they’ll pull it from there. Sometimes this policy will have one piece, this says one thing, and this policy of another piece, but they put all this together in a package that gives you three, five, ten, fifteen pages of documentation as to why your claim has been denied.
What’s the purpose of doing this? Why do insurance companies do this? Well, I think there’s a couple of reasons why they claim denials when there might potentially be coverage. Okay, I think there’s a couple reasons they do it. One is they try to get the policy to go away. If you get a fifteen, twenty page letter, you read it, it’s all a bunch of insurance jargon and it seems to be backed up by legitimate cases, you look at it and you’re like, “Okay, looks pretty strong.” You give it to your broker, your broker reads it, they say, “Wow, they’re not going to pay it, are they? Yes, fifteen pages worth. They’re not going to pay it.”
Anyway, a lot of folks go away. A lot of policyholders go away and they let it go. They let it go. They may have bad advice before they let it go, but either way. The letter is purposefully drafted in such a way that they’re going to want to believe that it’s not covered. The second purpose of the letter is to set it up so that the insurance company doesn’t fall into the trap of doing something in bad faith. It’s to purposefully put the burden back on you, the policyholder. What it is, is you give them something, you give them a claim, and they write this letter back and the letter is fifteen pages of stuff, and at the tail end of the letter, it’s expertly done to put the burden back on you. It will say, “By the way, if you disagree, let us know immediately and tell us the facts and the circumstances and the reasons why we’re wrong.”
We’ve heard that countless times, “Well, we denied, but you didn’t do anything for six years. You didn’t do anything for four years.” They act as if that’s a defense, and in some cases, it may be. We’ve never found it to be one, but they put the burden back on you, and sometimes they put the burden on you so heavily that there’s no way you can do it, so you go away because of that. By that, I mean they might say, “By the way, we don’t think it’s covered. It looks like it’s not covered. There’s no way it can be covered, but we still need to investigate and we need four pages of documents single-spaced, four pages of things. We need this from 1923 to present, and we need this from X to present, and we need these documents, we need those documents. We need these financials. We need every lawsuit you’ve ever had against you. We need this, we need that. We need all emails.”
By the time you’re done with it, you’re like, “I can’t do this. I can’t give them all of this information. I just can’t do it,” and in the back of your mind you’re like, “I don’t want to deal with this,” so you go away. Anyway, letters serve a purpose. Point number one, don’t believe them.