Bad Faith Insurance
September 17, 2004 2:00 PM   Subscribe

Is an insurance company acting in 'bad faith' after initially promising coverage, and giving you a claim number only a week later to deny you coverage? [more inside]

We had water damage (and eventually mold damage) from the remnants of the last hurricane that came through. As soon as I figured out that we were in for some trouble, I called the insurance company and explained the situation. They told me that I was covered and gave me a claim number. It is now a week later and they are telling me that I am not covered. After researching the policy, I am not covered.

Is it legally, in bad faith for the insurance company to say that you are covered and give you a claim number? It is too late in the day to get ahold of someone so I thought I might ask here to get a foot hold on my situation to mentally prepare myself for what's coming next.
posted by jasonspaceman to Work & Money (13 answers total)
 
"After researching the policy, I am not covered." Does that mean you agree you're not covered, or are you still disputing the fact?
posted by smackfu at 2:22 PM on September 17, 2004


I'm sure they would say the same thing you just did - that they gave you a number while they researched the policy and decided you were not covered.
posted by falconred at 2:32 PM on September 17, 2004


I dunno what the correct answer is, but sounds like a good question for your state's insurance commission.
posted by nakedcodemonkey at 3:17 PM on September 17, 2004


The answer: just giving you a claim number doesn't mean they haven't denied the claim, and even saying your covered and then deciding not isn't bad faith, at least in my experience (as an attorney in NY). And if they've denied the claim because they insist "the policy doesn't cover the accident/occurrence, it's not "bad faith" in and of itself.

Have they told you why the loss is not covered? Is there an exclusion in the policy they point to.

I'd be happy to offer you as much help as possible, but again, I'm a NY attorney.
posted by ParisParamus at 3:52 PM on September 17, 2004


Does that mean you agree you're not covered, or are you still disputing the fact?
I am not disputing, now, that I am not covered. The way they presented the policy to us was sneaky. Basically, if we have water damage, our basement is not covered, that is additional coverage, with a deductible of atleast $1000.

Thank you for your answer Paris. That is what I thought would be the case. We also now have a situation where we are finding mold that has been here for a while, but might have been covered up by the previous owners.
posted by jasonspaceman at 4:10 PM on September 17, 2004


We also now have a situation where we are finding mold that has been here for a while, but might have been covered up by the previous owners.

Whoa. If so, then you may well have a claim--if not against the insurer then possibly against the sellers and their broker (and maybe the home inspector if you hired one before the sale and there was visible evidence which he/she missed). Mold is serious. If they knew and didn't put it on the sale disclosures, talk to a lawyer. (IANAL) Oh, and by the way:
...most homeowner's insurance policies have mold exclusions, but courts have held suits against insurance companies if mold is a secondary effect of a covered loss...

"...a contractor's insurance may pay to cover the cost of mold remediation if it results from a defect," Gara said. The statute of limitations varies from state to state...
posted by nakedcodemonkey at 4:21 PM on September 17, 2004


The mold is and has been my major concern. I can throw up new drywall and lay new floor on my own. We have an almost two year old and the mold could affect her health greatly.
posted by jasonspaceman at 5:47 PM on September 17, 2004


It's important to remember that a "claim" is literally a claim--you're filing your assertion that you think you're covered, and they formally give you a number to track the consideration process.

(I'm not saying that they're fair or generous about it--I'm just pointing out that when you get the claim number, there's nothing at all binding about actually being covered. They're just saying they're willing to consider your claim, and will get back to you on whether or not they'll really pay for it.)
posted by LairBob at 6:06 PM on September 17, 2004


I called the insurance company and explained the situation. They told me that I was covered and gave me a claim number.

Rule #1: Insurance companies are the lowest scum of the earth. They rank behind communist china companies employing slave labour to sew together fake gucci wallets.

Rule #2: Employees of insurance companies have no sense of shame. They actually rank lower than lawyers in this regard.

Rule #3: Never tell the truth to an insurance company.

Rule #4: Whenever you talk to an insurance company, RECORD IT. PERIOD. If they say no, tell them you won't speak with them. THEY WILL LIE.

Rule #5: Don't take out insurance unless it's required by law. Take all the insurance money and save it up in a rainy day fund.

Rule #6: You can rule out Rule #5 if you manage to find a mistake in the system that lets you screw them over (ROTFLMAO + LOL ^ 1000).

Rule #7: If you don't believe #1 - #6, talk to a claims adjuster. Ask them things like "If, due to no fault of my own, I have bad luck and manage to have 5 people hit my car this year, my rates won't go up, will they?" and "If someone hits my car I can expect to sue them for millions in compensatory damages because they are insured if I get seriously hurt and can't work, right?" When you get your answers to them, re-read #1 - #6.

At the *LOWEST* of the *LOW* I had an insurance company accuse me of having a criminal record (FYI, I've never been convicted of even improper parking). When I phoned them from the police station telling them the police couldn't find a copy of my record, never mind a file in their system with my name on it, they backed off, saying "Ohh, uhhh... hmmm... uhhh... well... gee... seems like... yeah... I think we had someone else's data open, yeah..." Like hell they did. Burn in hell, Aviva.

Did you know that due to the new laws in Canada that allow citizens to request all information on them from a company, insurance companies are running *SCARED*? They're having meetings and everything to figure out how to combat this problem. Because, the only protection insurance companies have against you is that you don't know what they know.
posted by shepd at 11:15 AM on September 18, 2004


shepd: notice how a lawyer stepped in smelling the opportunity for a litigation :) ..oh well at least it's not an ambulance chase case. Yes I have prejudices, but I acknowledge sometime they're pro bono. Cui bono remains to be seen.

jasonspaceman: I Am Not A Lawyer, but in my experience the best method of communication between YOU and any company (which includes insurance) is writing a letter to them and sending the letter by Priority and Certified Mail by US Postal Service , also with Return Recepit.

This way, you receive a proof that they received your letter and the USPS Recepit should be a strong enough proof in court (again, IANAL). Also, given that business are required by law, afaik, to save the mail they receive for an amount of time they can't neither deny you never contacted them neither say that they "lost" the letter.

While on telephone, I seriously doubt your recorded telephone call wouldn't be challenged as doctored , I don't even know if constitutes a legal proof and under which circumstances. Consumer associations could also help you in the perennial quest to outsmart company lawyes and company lobbies.
posted by elpapacito at 2:58 PM on September 18, 2004


Oppps I almost forgot: keep a copy of every letter you send me ; at least two and keep one copy in one safe water/fire/theft resistant place. Yes, paranoia pays sometimes.
posted by elpapacito at 3:03 PM on September 18, 2004


Me=they
posted by elpapacito at 3:03 PM on September 18, 2004


I second jason's suggestion. Go after the previous owners.
posted by dmt at 6:34 PM on September 18, 2004


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