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When people purchase life insurance policies, they do so in good faith, hoping to provide some financial security for their family in the event of their death. Life insurance policy holders often pay into these policies dutifully over the course of years, sometimes over the course of decades. They do this to secure the promise made to them by the insurance company: namely that when they die, their families will not have to endure undue financial hardship. In an ideal world, whenever one of those good-faith policy holders dies, their life insurance provider would promptly pay out the promised sum in full.
Unfortunately, this is the real world, and that is not how insurance companies behave. Life insurance companies are businesses first and foremost, and their first prerogative is profit. This means that they will often look for ways to deny or delay payments to the beneficiaries of life insurance policies. Their primary goal is to pay out as little as possible, and they will actively seek ways to reduce payment—or get out of paying a policy altogether.
Why Do Life Insurance Companies Delay Or Deny Claims?
Every life insurance policy is different, and almost all of them have a specific list of things that, if done, will invalidate the policy and prevent a payout. Sometimes, insurance companies deny claims because the policy in question was legitimately invalidated in accordance with those terms. Unfortunately, denials are also sometimes made on false or insubstantial grounds, often on the assumption that the average person will not have the time, energy, money, or wherewithal in the aftermath of a loved one’s recent death to challenge the denial.
The same is true for delays. Some delays are the result of a legitimate question or request for more information or documentation that the insurance company needs to finish processing the claim. Other delays are weaponized to get beneficiaries to accept a reduced claim. Since life insurance payments are often used in part to pay for time-sensitive costs (like remaining debts and funeral fees), many beneficiaries are pressured into accepting reduced or lowball payments immediately rather than playing the waiting game as the insurance company continues to delay payment.
If you are the beneficiary of a life insurance claim that is being denied or delayed by an insurance company, you know firsthand that the experience can be demoralizing, exhausting, and altogether miserable. It is easy to see how people in that situation lose hope, and begin to feel like there is no one out there to advocate on their behalf.
However, for those struggling with life insurance companies in Houston, Texas, there is an advocate, and there is hope. Houston life insurance attorney Leroy Scott is here to help.
What Is Bad Faith Denial, And How Can It Be Used In Insurance Claim Litigation?
There are many different approaches an attorney can take in refuting a baseless delay or denial. One of those approaches is applying the laws around bad faith denial.
In Texas, there is a legal requirement for insurance companies to act in “good faith.” Since the average person is not well versed in insurance law and medicine, the insurance company has a responsibility not to take advantage. While the law obviously does not stop every bad faith action by every insurance company, it offers a tool to insurance attorneys who can use it to defend their clients against bad-faith denials and delays.
According to this law, insurance companies cannot:
Delay life insurance claims for unreasonable causes, or for an unreasonable amount of time
Unreasonably delay the payment of other death benefits
Deny clearly, obviously valid claims
Refuse to state a reason for a denied claim
Deny a claim without a sufficient investigation
Intentionally misrepresent the language of a policy (or a law) to delay, deny, or attempt to hinder a claim
Threaten or intimidate a claimant
Withhold requested information about a life insurance claim or policy
If you can prove that an insurance company did any of those things, you may be able to force them to reverse a denial or override a delay. Moreover, you may be awarded compensation for your losses, including pain and suffering, attorney’s fees, and any other losses you incurred due to their actions. If the violation is particularly glaring, a judge may award punitive damages—damages meant to punish the company—which can multiply your final award by three times or more.
Has your life insurance claim been delayed or denied in Houston, Texas? If so, there’s help. Houston life insurance attorney Leroy Scott has the skills, experience, and knowledge to advocate on your behalf and get the results you deserve. Call (281) 616-3403 for a free consultation today