In CE and CLE courses, we hear all the time that the most often cited reason for a grievance or complaint is lack of communication. This truism provides a useful rule of thumb to avoid bad faith claims. Remember, for most claimants, the event giving rise to an insurance claim often is the most significant event which will happen to the claimant this year. Events such as a car wreck, an injury claim, a home fire, a product disruption can wreak havoc on the insured. And, many insureds have little idea as to how to cope with these disruptions. At these times, when tension runs high and patience runs low, the carrier which responds promptly to communications from the claimant will be more likely to have a happy insured and less likely to be in a lawsuit.
For example, in a recent matter, the independent adjuster initially hired to investigate a claim had to be replaced due to health concerns. The replacement adjuster passed the claim to a third adjuster due to scheduling difficulties. The third adjuster then was replaced when the adjuster’s agency was purchased by a larger concern. During the multiple changes, the policyholder, a construction company, sent increasingly urgent communications stating that a failure to obtain claim resolution was jeopardizing its ability to finish projects. By the time the fourth adjuster focused on the file, the policyholder had been held in default on several projects and litigation ensued.
Tales like this highlight the need for an insurer to keep communicating with and responding to a policyholder. Had there been better communication, this result potentially could have been averted.