Dealing with disputes over insurance claims can often be as stressful as the incidents prompting them. The business owners or management are likely angry with the carrier, wondering why they paid so much in premiums only to find out that the carrier is contesting coverage for all or most of the loss. California businesses facing disagreements with their insurance companies over claims have several avenues for dispute resolution, including negotiation, arbitration and the court system.
Understand Your Policy and the Claims Process
Before engaging in any dispute, it’s vital to understand your insurance policy and the claims process thoroughly. Ensure you know your policy’s coverage limits, exclusions, and the procedures for filing a claim. Knowledge is power and your first line of defense in a dispute.
Attempt to Resolve Amicably
Simple miscommunications can lead to inadvertent coverage disputes. Businesses can reach out to their brokers to clarify any misunderstandings. They should provide all relevant documentation to support their claim, including photos, repair estimates, and police reports (if applicable). If you’re not getting satisfactory responses, don’t hesitate to escalate the issue to higher-ups within the insurance company.
Alternative dispute resolution
Your policy may list mediation as a required first step to try to resolve disagreements. It is a private and less formal process in which an independent third party, the mediator, tries to help both sides find a mutually agreeable compromise. So always check your policy to see if this applies to your situation.
Whether or not your policy requires mediation, some policies require disputes be resolved by binding arbitration (instead of litigation, which is discussed below). Arbitration can be quicker and less costly than court, but the decision is usually final and binding. The cost benefits of arbitration often hinge on whether the arbitration process involves a single arbitrator or a panel of arbitrators (usually one chosen by each party who in turn select a neutral umpire or chair). A panel of arbitrators can become very expensive, given each side usually has to pay for their own selected arbitrator and half of the fees of the third arbitrator (sometimes called the umpire).
Pursuing Litigation
There are different types of courts. Small claims court offers a straightforward solution for claims worth less than a fixed amount (varies by state), providing a more straightforward and faster resolution process. More significant claims exceeding the threshold go to civil court, a more formal and complex setting where legal representation is highly recommended. Going to court demands meticulous preparation and strategic legal thinking.
More Common than Many Realize
Disputes with insurance companies are common and can be challenging, but businesses in California have multiple paths for resolution. Regardless of the approach, the goal should always be a fair outcome that respects your rights and holds insurance carriers accountable. Many assume that attorneys would only be involved with a court case, but starting the process with an experienced insurance dispute lawyer reviewing the policy is a smart first step. The attorney can also guide clients through the entire process, which enables management to focus on running their company while the lawyer works toward the best possible outcome.