What If I Don't Agree With My Insurer?

You've Got A Contract

Ownership of an insurance policy means that you have a contractual relationship. Paying a premium to an insurance company creates an obligation on their part to provide coverage. The terms of the coverage is defined by the policy and most companies try to be clear about what you can expect for your premium dollars. It's up to you to understand the critical points of your policy, such as the following:

  • Who or what is protected?
  • How does coverage take place?
  • When is coverage effective?
  • How much coverage is provided?
  • What are my responsibilities for reporting losses?

As is typical of most contracts, both parties are expected to deal fairly with each other, under the contract terms. As far as an insurance contract, you the policy owner (or insured) and the insurer are partners in the insurance transaction. Partners often learn to understand and work with each other quite well. However, sometimes disagreements occur and you should be aware of how you may look to your policy for help. Arbitration And Appraisal

Two common areas of disagreement are over whether coverage exists and how much should be paid for a covered loss. Arbitration is a tool for addressing the former issue, while the latter is frequently handled by appraisal.

A policy owner may be in a position where, after filing a claim, it is rejected by the insurer. The insurer, in most cases, should offer an explanation for declining coverage. (Of course, if no explanation was given, the policy owner's first step should be to request this information. ) The insured and insurer may discuss their viewpoints and, failing to reach either an understanding or a compromise, may choose arbitration. This process typically requires each party to:

  • select their own qualified arbitrator
  • permit the two arbitrators to select a third arbitrator to act as a judge
  • allow that agreement among any two of the three parties stands as the decision
  • each party pays for its arbitrator and share the expense of the judge

The appraisal process is often similar or even identical as both parities usually:

  • select their own qualified appraiser
  • permit the two arbitrators to select a third appraiser to act as a judge
  • allow that agreement among any two of the three parties stands as the decision
  • each party pays for its appraiser and share the expense of the judge

Items that can have a big impact on either process are any local or state laws, the actual provision wording found in the applicable policy and certain rules regarding arbitration/appraisal procedure that may vary by locale.

IMPORTANT: Depending upon the type of policy or the provider of the policy, the terms being discussed here may either be called by another term OR MAY NOT APPLY. Please read your policy carefully. Last Resort

Of course, sometimes arbitration or appraisal fail to settle differences. In such instances, legal action may be the last resort. Note that many insurance contracts also have provisions on seeking legal action. Typically an insured is prohibited from filing a suit unless it's done within a certain time period and only after the insured has exhausted other avenues for resolving the conflict. While lawsuits between contract partners are sometimes inevitable, it's important that insurance consumers be aware of alternatives in resolving conflicts. It's even more important to take advantage of discussing your insurance coverage with a qualified insurance professional. Their expertise can be invaluable in dealing with complex insurance situations.


COPYRIGHT: Insurance Publishing Plus, Inc. 1998

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