Attorney Portrait Insurance

Third-Party Bad Faith Claim

| Read Time: 3 minutes

If you are injured by the negligence of another person, their insurance company is usually responsible to pay for your injuries. However, sometimes an insurance company refuses to settle for a reasonable amount, even when their liability is clear. If this happens to you, an experienced personal injury attorney can help you pursue a third-party bad faith claim against the insurance company. What Is a Stowers Demand? Many third-party bad faith claims are governed by the Stowers doctrine in Texas. The Stowers doctrine applies when you suffer damages that exceed the defendant’s insurance policy limits. Stowers Demand Letter To comply with the Stowers doctrine in Texas, your attorney would start by sending a Stowers demand letter to the insurance company. The letter must: Include a demand for compensation within the policy limits; State clear terms for accepting the demand; Provide a reasonable amount of time for the insurance company to respond;  Demonstrate that any subrogation claims and hospital liens have either been settled or will be resolved with the proceeds from the settlement; and Offer to fully release the defendant from further liability. If the insurance company rejects your Stowers demand, your next step is to go to court. Pursuing a Bad Faith Claim If you win a jury verdict for greater than the policy limit, then you may be able to make the insurance company pay the extra damages by bringing a third-party bad faith claim. The defendant is the one who would usually be on the hook for damages in excess of the policy limit. So technically, the defendant is the one who would have a bad-faith claim against their insurance company. But you can get a court to issue a turn-over order. This requires the defendant to give you their cause of action so you can actively collect against the insurer.  To succeed on a bad faith claim, you must demonstrate that: Your Stowers demand letter complied with the requirements above; Liability for the amount of the policy limit or more was reasonably clear; and You actually won a verdict in court for more than the policy limit. The most difficult element to prove is that liability was reasonably clear. If there was a fair dispute about whether the defendant was negligent, whether your negligence contributed to the accident, or the amount of damages, then it is not bad faith for the insurer to reject a Stowers demand, even if you later win. Why Would I Want to Settle for the Policy Limit If My Damages Are Greater? Even if your damages are significantly greater than the policy limits, it often makes sense to accept a settlement for the amount of the policy limit. The reality is that nothing requires an insurance company to indemnify a defendant for any more than the policy limits. And most defendants simply don’t have the assets to pay off large verdicts. This means that even if you go to court and get a verdict for an amount above the policy limits, you could struggle for years to ever recover that money. The defendant also has a motivation to settle within the policy limits. Doing so helps them avoid the risk of having a personal judgment against them. Such a judgment can lead to wage garnishment and liens on their assets that can follow them for years. This is why an insurer must accept a Stowers demand where liability is reasonably clear. With a Stowers demand, you can reach a settlement with the insurance company that gets you your money right away. You won’t have to spend years of uncertainty waiting for a jury verdict while struggling to pay your bills. How Do I Know If I Can Pursue a Third-Party Bad Faith Claim? If you suffered injury in an accident caused by someone else, contact our personal injury attorneys at the Johns Law Firm. We can help you determine whether a Stowers demand might be the way to go and handle every aspect of your personal injury claim. Our decades of experience working both for and against big insurance companies put us in a strong position to negotiate on your behalf. Call or contact us today to learn how we can help you get the compensation you deserve.

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Attorney Portrait Insurance

How to Deal with an Insurance Adjuster After a House Fire

| Read Time: 2 minutes

A house fire can be a devastating experience for a homeowner, and dealing with an insurance adjuster in the aftermath can only make matters worse. Though it can be a complicated process, you don’t have to go through it on your own.  If you or a loved one has been affected by a house fire, know you are not alone. Even if an insurance company has denied your claim, this is not necessarily the end of the road. The fire damage lawyers at the Johns Law Firm have the knowledge and experience necessary to fight back against your insurer. Read on to learn more about the fire insurance claim process and find out how we can help. How to Handle the Fire Insurance Claims Process The insurance claims process can be difficult to navigate, especially when it involves fire damage to your home. However, there are some things you can do to help maximize your insurance claim proceeds. Below are a few important things to keep in mind during the insurance claims process: File Your Claim as Soon as Possible It is crucial to comply with your policy and file your claim within the appropriate timeframe. Otherwise, you may forfeit your right to recover damages at all.  Request an Advance In some scenarios, you can get an advance payment against your claim. If you were forced to evacuate after the fire, this advance can help pay for basic necessities that you were unable to grab before relocating. Secure Your Property and Mitigate Damages Insurance policies require that you “mitigate damages.” In short, this means that you must take reasonable steps to minimize further harm to your property. This includes taking action to protect it from the elements, vandalism, and looters. Keep Track of Your Expenses Your policy may provide reimbursement for living expenses if you have to relocate after a fire. Thus, it is important to keep a careful record of all receipts, bills, and expenses. Don’t Feel Rushed Your insurance company will probably want you to close your claim as quickly as possible. However, don’t feel pressured to do so before you are ready. If you have received an offer for payment that you feel is not enough, contact a lawyer who can evaluate your case before moving forward. How the Johns Law Firm Can Help with Your Fire Damage Claim The Johns Law Firm has what it takes to assist with your fire damage claim. Our knowledge of this area of the law allows us to help assess and calculate damages, advocate for you against the insurance companies, and work toward a speedy resolution of your claim.   Our team of lawyers has extensive experience handling these types of claims, and we want to help. If your insurer has wrongfully denied your claim or failed to adequately compensate you for your damages, contact the Johns Law Firm today. 

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Attorney Portrait Insurance

How Long Does an Insurance Company Have to Pay a Claim in Texas?

| Read Time: 2 minutes

Are you waiting to hear back regarding an insurance claim you filed in Texas? If so, you might be wondering what you need to do next. The lawyers at the Johns Law Firm understand that this can be a complicated process to navigate on your own. Read on to find out more about the insurance claims settlement process in Texas and how we can help. Does an Insurance Company Have to Respond to My Claim?  In short, yes. Under Texas law, an insurance company is required to respond to a claim that is filed. Section 542.055 of the Texas Statutes provides that an insurer must do the following within 15 days of receiving notice of a claim from a claimant:  Acknowledge receipt of the claim; Commence an investigation into the claim; and  Request relevant information, statements, and forms from the claimant to assist with the investigation of the claim. An insurer’s failure to acknowledge that they have received your claim is in violation of the statute. However, the statutory requirements don’t end there. An insurer must also notify you of whether or not your claim has been accepted. In most scenarios, section 542.056 of the Texas Statutes states that an insurer must notify a claimant of acceptance or rejection of a claim within 15 days after the insurer receives all items, statements, and forms required to investigate the claim. An insurer can sometimes extend this to 45 days, but they must have a sufficient basis for doing so. Also, if the insurer rejects your claim, they must also provide you with the reasons for the rejection.  It is important to know your rights. If an insurance company has rejected your claim without a good reason, or they have failed to respond within the appropriate timeframe, you may need to take action. An experienced lawyer can help advocate on your behalf. Can I Speed Up the Process?  You cannot shorten the statutory timeframe that insurance companies have to work with. However, there are still things you can do to speed up the claims process. Because an insurer generally has 15 days to investigate the claim from the date they receive the requested information from you, sending these items as quickly as possible is to your advantage.  After an accident, try to compile as much information as possible to provide to the insurance company. Having witness statements, accident reports, and proof of loss forms completed and ready can help speed up the process.  When Does the Insurance Company Have to Pay the Claim? If an insurer notifies you that they will pay a claim or part of a claim, they must do so within a specific amount of time. Under Texas law, they cannot continue to delay payment. Section 542.057 of the Texas Statutes states that an insurer must generally pay the accepted claim “no later than the fifth business day after the date notice is made.” In fact, if an insurer fails to do so, you may be entitled to damages.  How a Lawyer Can Help If you are dealing with an insurance company that has delayed responding to or paying your claim, you might feel like there is nothing you can do. However, this is not the case. Know that you have rights, and there are actions that you can take. Don’t let an insurance company continue to delay your claims process. A lawyer can help protect your rights and fight on your behalf. Contact the team at the Johns Law Firm today for a free consultation to see how we can help you.

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Texas Insurance Code 541 and 542

| Read Time: 3 minutes

In Texas, insurance companies owe a wide range of duties to their policyholders aimed at ensuring claims are promptly adjusted and settled in a fair manner. An insurance company that breaches these duties can be liable to the policyholder for additional damages, penalties, and attorney’s fees. The reason insurance companies are so closely regulated is the inherent advantage they have over their insureds who are depending on coverage from the insurance company that they paid premiums for.  In Texas, there are two separate bodies of law that penalize insurance companies for acting in bad faith. The first is a common law implied covenant of good faith that requires an insurance company to treat you honestly and fairly. In addition, Chapter 541 of the Texas Insurance Code lays out in detail when an insurer engages in an unfair method of competition and unfair or deceptive acts or practices. In addition, Chapter 542 details an insurer’s duties to pay claims in a timely manner. If you believe your insurance company acted in bad faith, you should contact a Texas insurance attorney as soon as possible. Proving a Bad Faith Claim in Texas When proving a bad faith claim in Texas, it is important to understand that you have the burden of proof. This means that you, with the help of your lawyer, must demonstrate how the facts of your case meet the requirements of a bad faith claim. There are two ways that you can prove your bad faith claim: either as a common law bad faith claim or a statutory bad faith claim. Common-Law Bad Faith Claim To prove a common law bad faith claim, you must show that your insurance company denied or delayed your claim even though liability was reasonably clear. The Texas Supreme Court recognized a common law claim for bad faith in 1983. English v. Fischer, 660 S.W.2d 521 (Tex. 1983). Since then, the Texas Supreme Court has upheld the common law claim for bad faith despite the passage of statutes prohibiting insurers from engaging in certain actions that give rise to specific penalties.  Statutory Bad Faith Claim To prove a statutory bad faith claim, you must prove that your insurance company violated Texas insurance code 541 or 542.  Causes of Action You Can Bring Under Chapters 541  There are several different causes of action you can bring against your insurance company under Chapter 541 of the Texas Insurance Code. These claims can be brought against both your insurance company and insurance professionals, such as adjusters.  Misrepresentation of a material fact or policy provision; Failing to reach a settlement in good faith when liability is reasonably clear; Failing to reasonably explain why a claim was denied; Failing to affirm or deny coverage within a reasonable time; and Refusing to pay a claim without conducting a reasonable investigation. A Texas insurance lawyer can help you determine which of these causes of action is best suited to your case. First-Party Bad Faith Claims It is important to understand the type of bad faith claim that applies to your case. A Texas insurance attorney can help you figure out which type of claim you should file. First-Party Bad Faith Claim A first-party bad faith claim arises when you file a claim against your own insurance company after an accident or event. For example, you have a house fire and file a claim with your insurance company for the damage to your dwelling and personal property. If your insurance company fails to settle your claim when it is clearly liable under the terms of the policy, you can file a first-party bad faith claim against your insurance company. Damages There are two major types of damages available in bad faith suits against an insurance company. These include actual damages and attorney fees and court costs. Actual damages refer to the financial harm you suffered as a result of your insurance company acting in bad faith. It is also important to note that you can recover three times your actual damages if you can prove your insurance company knowingly violated chapter 541 of the Texas insurance code. A Texas insurance attorney can help you determine the amount of damages you could recover. What Should You Do If You Believe Your Insurance Company Has Acted in Bad Faith? If you believe your insurance company has acted in bad faith, you should contact a Texas insurance lawyer today. We at The Johns Law Firm will determine the appropriate avenue to prove your bad faith claim. We will fight your insurance company and strive to get you the compensation you deserve. Contact us today to schedule your free consultation.

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Attorney Portrait Insurance

Bad Faith Insurance in Texas: Know Your Rights

| Read Time: 5 minutes

In Texas, insurance companies owe a wide range of duties to their policyholders aimed at ensuring claims are promptly adjusted and settled in a fair manner. An insurance company that breaches these duties can be liable to the policyholder for additional damages, penalties, and attorney’s fees beyond what is owed under the insurance policy. The reason insurance companies are so closely regulated is the inherent advantage they have over their insureds who are depending on the coverage they paid for.  In Texas, there are two separate bodies of law that penalize insurance companies for acting in bad faith. The first is a common law implied covenant of good faith that requires an insurance company treat you honestly and fairly. In addition, Chapter 541 of the Texas Insurance Code lays out in detail when an insurer engages in an unfair method of competition and unfair or deceptive acts or practices. Somewhat related is Chapter 542 of the Texas Insurance Code, which provides deadlines for an insurer to pay and settle claims. If you believe your insurance company acted in bad faith, you should contact a Texas insurance attorney as soon as possible. Proving a Bad Faith Claim in Texas When proving a bad faith claim in Texas, it is important to understand that you have the burden of proof. This means that you, with the help of your lawyer, must demonstrate how the facts of your case meet the requirements of a bad faith claim.  There are two ways that you can prove your bad faith claim: either as a common law bad faith claim or a statutory bad faith claim. Common-Law Bad Faith Claim To prove a common law bad faith claim, you must show that your insurance company denied or delayed your claim even though liability was reasonably clear. The Texas Supreme Court recognized a common law claim for bad faith in 1983. English v. Fischer, 660 S.W.2d 521 (Tex. 1983). Since then, the Texas Supreme Court has upheld the common law claim for bad faith despite the passage of statutes prohibiting insurers from engaging in certain actions that give rise to specific penalties.  Statutory Bad Faith Claim Under Chapter 541 There are several different causes of action you can bring against your insurance company under Chapter 541 of the Texas Insurance Code. These claims include:   Misrepresentation of a material fact or policy provision; Failing to reach a settlement in good faith when liability is reasonably clear; Failing to reasonably explain why a claim was denied; Failing to affirm or deny coverage within a reasonable time; and Refusing to pay a claim without conducting a reasonable investigation. Insurance companies, adjusters, and other personnel can be sued and held liable for bad faith insurance claim handling. There are numerous business practices that insurance companies may engage in that fall under the umbrella of bad faith. For example:  Undervaluing claims Delaying adjustment of claims Delaying payment of claims Misrepresenting terms of the insurance policy Pressuring a policyholder not to hire an attorney Ignoring portions of the claim during investigation and adjustment Canceling or changing the terms of insurance after making a claim Failure to communicate with the policyholder Not providing reasons for the insurance company’s determinations Failing to assign qualified personnel to adjust and investigate your claim Request unnecessary information to delay the claim adjustment process Alleging the insured engaged in fraud or criminal behavior without reasonable justification Bad faith normally requires you to prove that the insurance company didn’t just make an error, but that it engaged in intentional or grossly negligent conduct aimed at harming its insured. I often like to classify bad faith claims as either being obvious or not so obvious. An example of an obvious bad faith claim is where the insurance company knowingly makes misrepresentations to a policyholder. For example, the insurance company denies your insurance claim after being told by its own experts that the claim is covered by your policy. Another example of obvious bad faith may be an insurance company that misrepresents the terms of your insurance policy or changes the terms of the insurance policy without your knowledge.  Not so obvious bad faith often deals with the valuation of your claim. In many cases, an insurance company will estimate the value of your claim on the lower end. Although frustrating, this itself may not be bad faith. You need to compare the insurance company’s investigation and reports to what you are claiming. If your dispute with the insurance company is over the value of specific items that you are claiming, there may not be bad faith if the insurance company can prove that its valuation was reasonable. However, if the insurance company has ignored portions of your claim or estimated your damage in ways that are unreasonable, you may have a good claim for bad faith.  Damages for Bad Faith Conduct and Unfair Trade Practices If you establish bad faith, the following damages can be recovered:  Treble Damages, i.e. three times the amount the insurance company should have paid you. To get treble damages, courts tend to require that you prove the insurance company intentionally or knowingly acted in bad faith.  Attorney’s fees, interest, and court costs.  Interest on the delayed payments. Don’t Forget About the Prompt Payment Statute Chapter 542 of the Texas Insurance Code creates a number of requirements for insurers to respond to, investigate, and pay insurance claims. These requirements are separate and apart from the bad faith practices prohibited under Chapter 541. If an insurer violates this law, you are entitled to recover attorney’s fees and damages in the form of an annual 18% penalty.  To collect these damages, the law requires: (1) the policyholder had a claim under the policy; (2) the insurer is liable for the claim; and (3) the insurer failed to comply with a requirement of the statute.”  There are a number of specific requirements that you need to meet to collect attorney’s fees and damages for breach of the prompt payment...

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Attorney Portrait Insurance

What Is Double Indemnity?

| Read Time: 2 minutes

A double indemnity clause is a type of provision found in many life insurance and accidental death and dismemberment policies. This type of clause allows for additional payout in the event of accidental death. However, insurance companies often make it difficult to classify the death as “accidental,” preventing you from getting the payment you may be entitled to. Contact the Johns Law Firm today to see if you qualify for a double indemnity claim and find out how we can help.  Double Indemnity Life Insurance Definition Double indemnity life insurance clauses require an insurer to provide a larger payout if the insured died as a result of accidental death. Very often, this additional payment will be double or even triple the amount that is provided for in the policy. Approximately 5% of all deaths in the United States are the result of an accident. Life insurance companies offer additional payouts for accidental deaths due, in part, to the low likelihood that you will die due to an accident.  Sometimes, however, insurers will try to deny double indemnity claims to avoid making additional payments that may actually be owed.  What Qualifies as an Accidental Death Determining what constitutes an “accidental death” is more complicated than you might think. Insurance policies will frequently carve out many exceptions to coverage under the policy. Below are some examples of deaths that generally qualify as accidental:  Murder,  Motor vehicle accidents,  Drowning, Falls, and Any other death not considered an “accident” by the insurer. But, for most causes of accidental death, the insurer will attempt to find an exception to coverage. The following are some common exceptions to coverage for a double indemnity claim:  Murder of the insured by a beneficiary under the policy; Accidents caused by the insured’s own alleged negligence; Accidental death where the insured was intoxicated; Suicide; and Natural causes. Even though there are many exceptions to coverage, this does not always mean that your claim should be denied. Having a lawyer who understands what does and does not qualify as an accidental death can greatly improve your chances of having your double indemnity claim paid.  What Can I Do If the Insurance Company Denies My Claim? Unfortunately, many insurers will deny double indemnity claims that should be paid. However, even if your claim is denied, you may be able to contest it.  For example, an insurer might deny a double indemnity claim based on their determination that the insured committed suicide. But, if you can prove that the death was, in fact, an accident and not a suicide, then your claim should not be denied. Likewise, an insurer might deny payment of the double indemnity benefit because it believes the accidental death was the result of the insured’s own negligence or intoxication. While these may seem like fairly standard exclusions, insurers can stretch their meanings to deny coverage. Why? A double indemnity payment is a huge hit on an insurer and it will do anything it can to avoid doing so. The good news is that having an experienced lawyer in your corner to argue on your behalf can make all the difference.  Dealing with the aftermath of a loved one’s death is challenging, and navigating a double indemnity insurance claim and subsequent denial can make matters feel even worse. At the Johns Law Firm, we want to make sure you feel taken care of.  If you or someone you know has had a double indemnity claim denied by an insurer, contact us today to see how we can help. 

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TX Life Insurance – Two-Year Incontestability Clause

| Read Time: 4 minutes

A life insurance policy is a contract between your insurance company and you, the policyholder. While the benefits of life insurance are clear, there is always a risk that a claim is denied because the information is omitted from an insurance application. To offset this risk, the Texas Legislature and most other states have enacted a law requiring all life insurance policies to contain an incontestability clause. See Texas Insurance Code, Section 1131.104. This law states that your insurance company cannot contest the validity of your life insurance policy after it has been in force for two years from its date of issue. The purpose of an incontestability requirement is to protect you from a challenge to the validity of your policy long after the policy has been issued. The idea behind this requirement is that a life insurer has a duty to investigate the medical history of its policyholders and must take affirmative steps to void a policy or readjust a premium within the first two years that the policy was issued.  However, a life insurer can refuse to pay a claim after the two-year incontestability period if it can prove that the insured made intentional misrepresentations in the insurance application. Texas Insurance Code, Section 705.104 Additionally, Texas Insurance Code, Section 1131.104 says that a statement you made relating to your insurability can’t be used against you in a suit contesting the validity of your policy, provided that your policy has been in effect for two years or more. However, your insurance company can use a written statement against you after the two-year incontestability period to try to prove that you made a material misrepresentation in your life insurance application. If your life insurance company tries to challenge the validity of your life insurance policy, you should contact a Texas insurance lawyer as soon as possible. How Does an Incontestability Clause Help You? When you purchase a life insurance policy, the clock begins running on the incontestability clause’s effective date. If your insurance company has not found an error in your application within two years of the date of the issue, it cannot cancel your policy unless one of a handful of exceptions is met. In other words, the insurance company has two-years to contest the information in the insurance policy.  If applicable, your beneficiaries will receive their benefits due to your policy even if your insurance company claims that misrepresentation in your application made the policy invalid. A Texas insurance lawyer can help you understand how the incontestability clause in your life insurance policy can help you. What Are Some Exceptions to Incontestability Clauses? Nevertheless, insurance companies can often cancel or modify your life insurance policy in a few circumstances. Misstated Age or Gender First, if you misstated your age or gender on your application, your insurance company may modify your insurance benefits to reflect your true age and gender. This is because many insurance policies contain a “misstatement of age” provision that specifies the insurance benefits will be adjuster based on the insured’s actual age.  Death during the Application Process Second, if you die before the incontestability clause expires, your insurance company may be able to cancel your policy if the applicant made any misrepresentations in the policy application. Importantly, the misrepresentations do not have to necessarily be material or intentional. Any misrepresentation or omission, even slight, can normally be used to cancel a policy before the expiration of the incontestability period. However, if the applicant did not make any misrepresentations or omissions in the policy application, and subsequently dies within two years after the policy was issued, the life insurance company is obligated to pay the claim.     Nonpayment of Premiums The life insurance company can always cancel a policy for failure to pay premiums regardless if it occurred before or after the two-year contestability period.   Insurance Fraud: Intentional Misrepresentations Your insurance company may also void your policy and refuse to pay if they can prove that the applicant engaged in insurance fraud. Insurance fraud occurs when you make deliberate misrepresentations to obtain benefits you’re not entitled to. The issue of fraudulent misrepresentations versus negligent omissions is the key source of conflict in many life insurance disputes. For example, a life insurance company may claim that an applicant’s failure to disclose a medical condition on the application is evidence of fraudulent intent. However, in most cases, that is not true. Many applicants innocently omit certain details about their medical history on a life insurance application. Think about all of the times you have been to the doctor and consider if you can recall every medical condition or diagnosis you have had. Many life insurance companies will seize upon an innocent omission to try to deny the claim. If your life insurance claim has been denied due to an alleged misrepresentation in the policy application, do not be dismayed. Insurance companies make money by denying legitimate claims. However, a Texas insurance lawyer can advise you as to whether one or more of these exceptions might apply to your case. What About Misrepresentations Caused by an Agent’s Negligence? One issue that comes up often is a misrepresentation or omission in the insurance application that was not the applicant’s fault. Instead, it was the fault of the insurance agent. Most of the time when you apply for life insurance your agent will walk you through the application and write down your information. In fact, it is not uncommon for the application to take place over the phone. We recently had a deposition in a case where the insurance agent admitted that he never asked questions as they actually read on the insurance policy. Think about that. How can you provide honest responses in an insurance application when the agent does not even ask you the correct questions.  Sometimes courts will impute the agent’s negligence onto the insurance company. This means that any misrepresentations or omissions in the application are the faults of the insurance company and the policy cannot be...

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Appealing Your Long-Term Disability Denial

| Read Time: 6 minutes

Having your long-term disability claim denied can be stressful and confusing. If this is an issue you are dealing with, you should take heart in the fact that most long-term disability claims are denied. This should not be surprising. Insurance companies make money by denying claims. What Is the Next Step? You are likely required to file an administrative appeal. Appealing a denied long-term disability claim is not easy. However, a long-term disability appeal is a lot like a redo. You get a second chance to compile and present medical and vocational evidence to try to have your claim accepted. For many, the assistance of an experienced disability insurance attorney to navigate the process is essential. ERISA Versus Non-ERISA Policies The Employee Retirement Income Security Act (“ERISA”) governs many employer benefits including disability insurance. If your disability benefits are provided by your employer, ERISA likely applies. ERISA regulates most aspects of how disability claims are processed. This includes the timeframes for making a claim determination. Under ERISA, when a claim is denied, an employee must appeal in accordance with the administrative appeals process. A policyholder cannot file a lawsuit for wrongful denial of the claim until the administrative appeals process has played out. The process of filing an administrative appeal can be time-consuming. In most cases, a policyholder will have 180 days from the date the claim has been denied to appeal. Only after the administrative appeal is denied can a policyholder file a lawsuit. Non-ERISA disability policies are governed by state contract law similar to most other insurance policies. There is no administrative appeal process. If your claim is denied, you can file a lawsuit. Steps to Making Your Disability Claim Even though you may have already received short-term disability benefits, this has little to do with whether you qualify for long-term disability benefits. For long term disability claims, your medical history and medical records are critically important. A policyholder must establish that he or she has a disabling condition. It is the policyholder’s burden to establish within a reasonable medical degree of certainty that a disabling condition exists and that the policyholder’s ability to work and earn wages has been impaired. Long-term disability policies tend to either be “own occupation” and “any occupation” policies.  Under “own occupation” policies, a policyholder is considered disabled when, due to an illness or accidental injury, he or she is unable to perform their current job. With this type of policy, the policyholder can qualify for benefits even if he or she can perform a job or occupation that is different from their “own occupation.” This differs sharply from “any occupation” policy in which an applicant is disabled when he or she is unable to work any type of job. For example, under any occupation policy, a contractor whose disability does not prevent him from working a light-duty job could not recover long-term-disability benefits. Many long-term disability claims involve significant potential recoveries and it is not uncommon for insurance companies to aggressively litigate claims. Experts often take on a significant role in disability claims. If your claim is disputed, you need a qualified team of experts to help establish that you are disabled. Establishing a Condition That is Consider Disabling Disability claims first and foremost are driven by medical opinion. A policyholder seeking benefits has the burden of establishing that he or she has a medical or psychological condition that is disabling. As a rule of thumb, the condition needs to be objectively serious. If your condition is insignificant or ill-defined, you probably will not qualify. Further, your physicians or medical experts need to help establish that your condition impacts your ability to work. This issue can be tricky depending on whether you have an “any occupation” or “own occupation” policy. Vocational evidence often comes into play in long-term disability claims. Vocational evidence is simply evidence related to your education, work experience, and ability to earn a living. In many cases, the insurance company may hire an expert to state that you can work your regular job, or, in the case of an “any occupation” policy, a different job. Similarly, an experienced disability attorney should retain a vocation expert to establish that the client is disabled within the meaning of the policy. The strength of a vocational expert’s opinion regarding disability largely depends on your objective medical evidence. If you have not been evaluated by the correct specialists to establish a disability, your claim will probably not be approved. This is why having an experienced long term disability attorney to assist you can be instrumental.   Why are claims denied? In many cases, disability claims are wrongfully delayed or denied, causing hardship and stress to the policyholder. However, sometimes claims are denied simply because the policyholder did not present enough evidence with their initial claim. It is the policyholder’s burden to establish the existence of a disabling condition. Most disability claims are denied due to a supposed lack of supporting medical or vocational evidence. For example, a policyholder may present evidence that they have been diagnosed with fibromyalgia but provide no further information as to how it impacts their ability to work. While fibromyalgia may, in reality, be a disabling condition, the fact the policyholder did not link their condition to vocational status may prevent their claim from being approved.  On the flip side, the insurance company is working hard with a team of experts to deny your claim. Most insurance companies have a list of preferred medical experts who they routinely send disability claimants to for evaluation. The insurance company’s experts will often differ sharply from your treating physicians and will almost always conclude that you are not medically disabled. While this is not fair, it is the way the disability process works. If you feel the insurance company is stacking the deck against you, you should consult with a disability insurance attorney.  What to Do After a Disability Claim is Denied? When a claim is denied, the policyholder should be provided...

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What is a Life Insurance Interpleader Action?

| Read Time: 4 minutes

You are hanging around your house when a process server knocks on your door and serves you with a Complaint for Interpleader. You may ask: What is this? What must I do next? Will this just go away? It will not just go away. The good news, you have been named as a party because you may be owed a large sum of money. The bad news, you have to make your claim in court.  Definition of Life Insurance Interpleader Action An interpleader is a very different type of legal case. Unlike a typical lawsuit in which a plaintiff sues a defendant, an interpleader is filed by a party referred to as a stakeholder who is holding some type of property – probably money – that may be owed to multiple people. The stakeholder initiates the interpleader action because it is concerned that it may give the property or money to the wrong person. Rather than be exposed to double liability, the stakeholder will force all parties with a claim to the property into court to make their claims. That way, the stakeholder avoids the potential liability of giving the property to the wrong party.  Life insurance interpleaders arise when people have competing claims for life insurance proceeds. An insurer will often deposit the money into the registry of the court and file an interpleader action forcing the claimants to work out their claims in court. That way, it will ultimately be up to the court system to determine who is entitled to the money. In essence, the insurance company puts up the money, wipes its hands, and walks away.  INTERPLEADER ACTION FAQ What Should You Do Once You Have Been Served?  First, we recommend that you contact an experienced life insurance attorney to discuss your options. Now that you have been forced into this situation, you need to expect the other person claiming the life insurance proceeds will have competent legal counsel. If you truly believe you are entitled to the life insurance proceeds, you need to assert your claim in court or risk losing.  You Need to Act Fast If the interpleader has been filed in federal court, you have 21 days to file your response. Failure to provide a timely response could lead to default and you losing your claim without even making an appearance in the case.  Federal or State Jurisdiction  Rule 22 of the Federal Rules of Civil Procedure permits an interpleader action to be filed in federal court as long as the court has subject matter jurisdiction over the case. Subject matter jurisdiction exists either because there is a federal question, i.e. a federal law that is implicated, or because their parties have diverse citizenships.  If your life insurance policy was issued through your employment, then there will probably be federal question jurisdiction because ERISA governs employer-sponsored benefits. There are also life insurance benefit programs for federal government workers that are also subject to federal question jurisdiction.  Diversity jurisdiction applies when the claim’s value exceeds $75,000.00 and the parties are citizens of different states.   Insurance carriers tend to prefer to file interpleader actions in federal court.  INTERPLEADER ACTION FAQ How Do You Make Competing Claims?  The reason an insurer files the interpleader is that there are multiple or competing claims for life insurance proceeds or to other property. To make a claim, you will need to file an answer to the interpleader action. It is also common to file a cross-claim against other claimants named in the complaint.   It is common for the insurer that filed the interpleader to seek leave of court to be dismissed from the case. It is normally the insurer’s position that they had fulfilled their duty by depositing the funds into the registry of the court and allowing the parties’ to make their claims. Sometimes the claimants may have separate claims against the insurance company. For instance, if the insurance company knew a person is the rightful beneficiary but proceeded to file an interpleader action anyways, the insurance company may be liable for penalties and attorney’s fees under a variety of prompt payment and bad faith claim handling laws.  Once you have filed a response, you will have the opportunity to discover evidence, hire experts, take depositions, and proceed to trial to prove that you are entitled to the life insurance proceeds.  There are a number of different case types that we tend to see more often with life insurance interpleaders. One: Lack of Capacity to Change Beneficiary We see a lot of cases where the insured changed the primary beneficiary later in life when the insured arguably lacks the mental capacity to understand that he was making the change. Along the same lines, we also see situations where people close to the insured may attempt to use undue influence, force, or duress to change the beneficiary. In these types of cases, objective medical evidence that the insured lacked capacity certainly helps challenge the change. In these situations, there are often nefarious actors with past history of wrongdoing involved with the insured. We have worked on multiple cases where a former felon released from prison suddenly becomes the insured’s caretaker. These cases can be difficult to prove and often rely on a combination of medical evidence and testimony to invalidate a beneficiary change.  Second: Divorce Many states will void an ex-spouse’s interest as a life insurance beneficiary in the event of divorce. Of course, there are numerous other exceptions to this rule. For instance, sometimes a property separation agreement will stipulate that a spouse is entitled to certain insurance benefits. Other times, an insured may list or re-inscribe the ex-spouse after the divorce.  Third: ERISA Preemption While most states will invalidate an ex-spouse’s beneficiary designation, life insurance policies that are governed by ERISA – a federal statute, do not follow a similar path. Under ERISA policies, the insured must change the beneficiary. If they do not, then the ex-spouse may be entitled to life insurance benefits.  Fourth: Homicide  Most...

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Examination Under Oath

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Most insurance policies allow the insurance company to require a policyholder to answer questions under oath and to produce documents and other information so the insurance company can investigate an insurance claim. This formal legal proceeding is called an examination under oath. The examination part of this process is requiring the policyholder to answer questions that are asked by a representative of the insurance company. In most cases, the insurance company’s representative is an attorney who has been hired to investigate the policyholder and provide the insurance company with advice about how to handle the claim. The examination normally takes place at a court reporter or attorney’s office. In most cases, an examination will last for at least a few hours and will be recorded by a court reporter. Under oath means the policyholder must swear to answer the questions truthfully. For many, an examination under oath can be highly stressful. To be completely upfront, an examination under oath is not common. They are often requested when the insurance company suspects the policyholder has done something wrong or has attempted to deceive the insurance company. Other times, the insurance believes there is a reason it can deny the insurance claim. Regardless, an examination under oath is an important event in an insurance claim that a policyholder needs to take seriously. Preparation is key to a successful outcome. In addition, refusing or failing to submit to an examination under oath can result in the denial of your insurance claim. Why Does an Insurance Company Want to Take My Examination Under Oath? Below are some common issues insurance companies often want to investigate during an examination under oath: The policyholder misrepresented the cause of the damage. The policyholder made misrepresentations in the policy application. The policyholder committed a crime related to the insurance policy. The policyholder committed fraud. The policyholder is seeking significantly more money than what the insurance company believes is owed. The policyholder has not answered the insurance company’s requests for information about the claim. The policyholder has hired a contractor, adjuster, or other experts who have a bad history with the insurance company or has a history of red flags. The insurance company believes the policy does not cover the claim. The insurance company believes there is a policy exclusion that applies.   These are not small or insignificant issues. However, it is important to remember that the mere fact that an insurance company wants to conduct an in-depth investigation of an insured does not mean it has a reasonable basis to deny an insurance claim. On the contrary, insurance policies are interpreted broadly by courts in favor of expanding insurance coverage as much as possible. Still, it is important for an insured who has had an examination requested to consult with an experienced insurance attorney to ensure he or she is adequately prepared for the examination. What Does Your Insurance Policy Require You to Do? Insurance companies tend to treat policyholders in a very abrasive and demanding manner when requesting an examination. This is especially the case when the policyholder is not represented by its own attorney. It is not uncommon for the insurance company to out of the blue give a policyholder a day and time to appear at a location to be questioned under oath. These demands normally include an extensive list of documents the insurance company insists that are brought to the examination or produced ahead of time. The insurance company may even claim that if the policyholder does not comply, he or she may be in violation of its duty to cooperate with the investigation.  For one, a policyholder does not have to appear for an examination on the day or time demanded by an insurance company. Policyholders have lives – jobs, children, and responsibilities. The most important thing a policyholder should do is stay in active communications with the insurance company. When it comes to scheduling the examination, we recommend first retaining an attorney to walk you through the specifics of your claim and communicate with the insurance company on your behalf. However, at a minimum, you should schedule your examination well enough into the future to gather the documents requested by the insurance company and review everything you need to be familiar with the claim. I’m often asked why does an insurance company gets to take an examination under oath? The right to take an examination under oath stems from the language in an insurance policy, which is a binding contract. Courts have repeatedly upheld an insurance company’s right to take an examination under oath as a contractual right that the policyholder agreed-to. The terms and conditions in the insurance policy must govern the relations between the insurer and the insured. Because an examination under oath is based on a contractual obligation, courts have ruled that the U.S. Constitution’s Fifth Amendment right against self-incrimination does not apply and that an insured must respond to questions that may implicate the insured in criminal activity. If the insured refuses to answer questions, the insurance claim may be denied. Most insurance policies contain a provision stating that an insurance company can take the examination under oath of the policyholder to investigate a claim. Some policies may require the insured to have others with knowledge of the claim to also submit to an examination. Examples of others who may have knowledge of a claim contractor, public adjusters, and residents. From the insurance company’s standpoint, these individuals may have knowledge about certain aspects of the claim. However, the policyholder ultimately can’t force someone else to sit for an examination and many insurance companies use this as a tactic to intimidate policyholders. Indeed, many insurers think the policyholder will cave in if the insurance company begins a wide-reaching investigation. It is very much likely that the insurance company is investigating the claim so aggressively because the case has tremendous value and this is how the insurance company can leverage you into taking a lowball settlement. Courts have struggled...

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