Katrina Taraska, Vonachen, Lawless, Trager and Slevin
Katrina Taraska
Recent media attention on the staggering number of insurance claims denied in the wake of Hurricane Katrina, has given many consumers pause to ask, “Am I really insured?” The answer may depend on the state in which you live, the insurance provider through which you have purchased coverage, your recordkeeping practices and the amount of time and energy you are willing to expend in order to settle your claim.
While many of us will never have the unpleasant experience of being denied policy benefits, you may need to employ additional resources to protect yourself if confronted with this situation. The Illinois Department of Financial and Professional Regulation (IDFPR), Division of Insurance is a good place to turn both for consumer information and relief. This department operates for the protection of Illinois policyholders—to ensure that all providers selling insurance in Illinois obey the state insurance laws. Consumers can research recent decisions, disciplinary actions and insurance providers identified as questionable carriers. In addition, interested parties can find helpful information on the rights and obligations between policyholders and their respective insurance provider as well as third-party companies. “Insureds” can even file a complaint with the IDFPR, if they believe they have fallen victim to unscrupulous insurance practices.
The IDFPR Division of Insurance can reasonably manage many disputes involving general claims, coverage issues, policy cancellations and sales misrepresentations. However, there are limitations on the scope and/ or nature of matters that can be addressed through the department. For example, the IDFRP Division of Insurance cannot render legal advice or act as a personal advocate for an insured.
A second, and fairly effective, alternative avenue which policyholders can pursue is through the filing of a civil lawsuit—based upon violations of the Illinois Insurance Code, 215 ILCS 5/155—for the vexatious and unreasonable delay in settling a claim. This statute creates a penalty or punitive damages, which a potential insured could recover against an insurance provider if they encounter unnecessary difficulties in the processing of a claim. The statute provides that in such cases of unreasonable delay—where no bona fide dispute exists—the court may assess “as part of taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 60 percent of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of costs
(b) $60,000.00
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action”
With the inclusion of attorneys’ fees and costs of litigation—which are paid by the defendant/provider if the claimant prevails—this law levels the playing field. Additionally, an insurer cannot defeat a civil action and escape liability simply by eventually paying the claim. Thus, the potential penalty for unfair claims practices may have serious consequences if the conduct is construed as an unreasonable or malicious delay.
Preventative measures are always prudent:
1. Keep records of any covered property.
2. Read your policy and ask questions as to the meaning of any term or condition that you do not understand.
3. Follow any guidelines for processing a claim.
4. When you fill out your application for insurance, do your best to be accurate and consult your medical records if necessary in cases of health coverage.
5. Finally, be persistent and document any communications with the insurance adjuster in writing. This will be crucial for purposes of any potential subsequent claim filed either with the Illinois Department of Financial and Professional regulation or civil action.
For more information on ways to protect yourself and improve your chances of successfully settling a claim, go to www.idfpr.com or consult the 215 ILCS 5/155 statute. tpw
While many of us will never have the unpleasant experience of being denied policy benefits, you may need to employ additional resources to protect yourself if confronted with this situation. The Illinois Department of Financial and Professional Regulation (IDFPR), Division of Insurance is a good place to turn both for consumer information and relief. This department operates for the protection of Illinois policyholders—to ensure that all providers selling insurance in Illinois obey the state insurance laws. Consumers can research recent decisions, disciplinary actions and insurance providers identified as questionable carriers. In addition, interested parties can find helpful information on the rights and obligations between policyholders and their respective insurance provider as well as third-party companies. “Insureds” can even file a complaint with the IDFPR, if they believe they have fallen victim to unscrupulous insurance practices.
The IDFPR Division of Insurance can reasonably manage many disputes involving general claims, coverage issues, policy cancellations and sales misrepresentations. However, there are limitations on the scope and/ or nature of matters that can be addressed through the department. For example, the IDFRP Division of Insurance cannot render legal advice or act as a personal advocate for an insured.
A second, and fairly effective, alternative avenue which policyholders can pursue is through the filing of a civil lawsuit—based upon violations of the Illinois Insurance Code, 215 ILCS 5/155—for the vexatious and unreasonable delay in settling a claim. This statute creates a penalty or punitive damages, which a potential insured could recover against an insurance provider if they encounter unnecessary difficulties in the processing of a claim. The statute provides that in such cases of unreasonable delay—where no bona fide dispute exists—the court may assess “as part of taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 60 percent of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of costs
(b) $60,000.00
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action”
With the inclusion of attorneys’ fees and costs of litigation—which are paid by the defendant/provider if the claimant prevails—this law levels the playing field. Additionally, an insurer cannot defeat a civil action and escape liability simply by eventually paying the claim. Thus, the potential penalty for unfair claims practices may have serious consequences if the conduct is construed as an unreasonable or malicious delay.
Preventative measures are always prudent:
1. Keep records of any covered property.
2. Read your policy and ask questions as to the meaning of any term or condition that you do not understand.
3. Follow any guidelines for processing a claim.
4. When you fill out your application for insurance, do your best to be accurate and consult your medical records if necessary in cases of health coverage.
5. Finally, be persistent and document any communications with the insurance adjuster in writing. This will be crucial for purposes of any potential subsequent claim filed either with the Illinois Department of Financial and Professional regulation or civil action.
For more information on ways to protect yourself and improve your chances of successfully settling a claim, go to www.idfpr.com or consult the 215 ILCS 5/155 statute. tpw