In my several years working at Merlin Law Group, I have seen my share of insurance claim denials. Sometimes the insurer makes the proper claim decision, sometimes they do not. I will be the first to say that not every case is a bad faith case.
If you are reading this blog as a policyholder, whether you're a homeowner or other property owner, it is important to know that if a claim is being denied by the insurance company, it never hurts to have an insurance professional examine the claim decision. This is not a newsflash . . . insurance companies can make mistakes and deny claims in error. If a policyholder does nothing after receiving the claim denial, then he or she may never know if the policy benefits denied should have been paid.
I can give a couple of recent examples where I succeeded in helping policyholders overturn a wrong claim decision—without litigation, I might add. In both instances, the insurance companies misapplied the policy to the facts of the claim. One was a vandalism claim where the property owner lived out of state and did not make the insured home his primary residence, but occasionally would stay at the property during on visits. After the vandalism loss, the insurance company denied the claim based on vacancy contending that the insured had not been living at the property for more than 30 days prior to the loss. Someone not insurance savvy would not necessarily question that claim decision. Here, the insurance company got it wrong because it confused vacancy with occupancy. A home is vacant if it is free of inanimate objects, e.g., furniture, appliances, personal belongings. A home is unoccupied if no one is making it their abode. In this claim, the property at the time of the loss was fully furnished with all of the everyday items one would expect to find in a home. So to use vacancy as the basis for denial was wrong. Moreover, there was no language in the policy where a claim could be denied based on occupancy. After presenting the insurance company with a request for reconsideration premised on the above, the claim was accepted and paid. It goes without saying that the property owner did the right thing by questioning the initial decision.
The other claim dealt with the clean-up of decomposed remains at a property. Both Chip Merlin and my colleague Nicole Vinson have blogged about dead body claims. I would like to think that they are infrequent, but maybe these claims occur more often than we know. I will spare all of the details, but essentially the insurance company denied the claim based on the policy's pollution exclusion. Pollution as defined in this policy did not address decomposed remains. The standard pollution exclusion, as the one here, contemplates pollution related to industry or manufacture. After presenting case authorities and other insurance sources, the insurance company reconsidered the initial denial and ultimately accepted the claim. Again, the property owner here did not simply accept the insurance company's claim decision, but questioned the decision because it just didn't seem right. By having the matter reviewed, a wrong claim decision was corrected.
Policyholders should understand that it never hurts to have another pair of eyes look at an adverse claim decision. If a claim was denied in error, the policy benefits will never be paid if the claim decision is simply accepted. If you stumble across this blog, I will venture to say you are questioning the claim decision and looking for answers.