A long-held adage in the insurance sector is that claims are where the [insurance] rubber meets the road. Up to that point, everything is merely ‘talk.” Applications, policies, endorsements…those frame the coverage that is sought, the obligations that the various parties agree to uphold and coverage intent. Much of that is theoretical unless and until a loss occurs.

The court case that attracted our attention this month involved some confusion on how to respond to a loss. The confused party happened to be the insurance company. The action began with a driver on a route colliding with an SUV that crossed a road’s center line. Both the driver and the trucking company sued the other vehicle’s owner and were awarded significant damages via a default judgment.

The insurer, relying on the fact that the insured household did not appear or participate in the lawsuit, asked a court to dismiss the matter. Click below to see how a lower and then an appellate court viewed their request.

Please click on the link to get more details on the court case.

Yes, insurers have a definite responsibility to practice a form of due diligence in approaching claims that are presented to it. Paying for losses that do not qualify for protection may be good for parties that seek damages, but recklessly enriching ineligible parties does not serve either insurers or the insuring public well. Hopefully, it’s clear that claim denials are frequently justified. When they are, they preserve the integrity of a given policy, they help to assure that funds needed to respond to legitimate claims are readily available.

Insurers, insured households and third parties all need to be clear about what situations are protected under a personal auto policy.

Click here to see information on what a personal auto policy is meant to cover. It is from the Personal Lines Automobile Section of Gordis on Insurance, found in Advantage Plus.

We just mentioned that the insuring public is served poorly when claims are rejected out-of-hand. When making the decision to provide a given household with a personal auto policy, It is important to have a clear picture of that household’s driving exposures. This critical information has to be examined to determine whether existing exposures to loss align with a policy’s coverage intent. Pairing this information then provides fuller guidance regarding a given claim’s eligibility.

Click here to see an excerpt of a tool that could assist in securing full information on what persons comprise a given household’s driver situation. It is from Personal Lines Risk Survey found in Advantage Plus.

So, an insurer is armed with the knowledge it needs when a claim rolls in. It knows what is supposed to be covered. It knows who is supposed to be covered. It then follows that it knows the right decision to make regarding whether its automobile policy should respond to a loss. However, that did not occur in our featured case. Things went astray due to a technicality. In the particular insurer’s view, an obligation to provide coverage was dissolved by a letter “t” that went uncrossed. It permitted an issue that was not relevant to control their policy’s response. Thus, the parties awarded damages pushed their position that coverage was merited.

There are certain instances where a party driving a vehicle that is listed under a policy can cause damage or injury to others and policy coverage should be ineligible. When such instances occur, they should be denied and fought. However, coverage decisions should not have insubstantial rationale.

Click here to see an article addressing a loss exposure that, often, is not properly handled. It is from Emarketing for Agencies that is found in Advantage Plus.