Negotiating With Insurance Companies

Description

22 Settlement-Maximizing Tips from an Insurance Insider

Negotiating with Insurance Companies brings you an insider’s perspective on how to establish coverage, influence the carrier’s reserves, and gain a tactical advantage in negotiations and litigation.  The latest revision adds more than 25 new sections on such timely topics as texting while driving, cyber bullying, and internet insurance sales, as well as advice and sample letters for dealing with outrageous low ball offers.

Author Joseph Vaccaro has more than 40 years of claims handling experience, with 11 years in the claims department of one of the nation’s largest insurance companies. There, he supervised adjusters and handled casualty claims in all lines of both personal and commercial insurance.

In Negotiating With Insurance Companies, Mr. Vaccaro brings you an insider’s perspective on how to establish coverage, how to influence the carrier’s reserves on your claim, and how to gain a tactical advantage in negotiations, mediation and litigation.

Negotiating With Insurance Companies puts decades of insurance claims experience at your fingertips and provides practice-proven advice and strategies for handling issues related to:

• Personal auto claims;
• Commercial auto/truck claims;
• General liability claims;
• Big damages, bad liability cases;
• Own occupation disability income claims;
• Non-ERISA health insurance claims;
• Homeowners and commercial property losses; and
• Bad faith.
• Overcome defenses
• Protect attorney’s fees

Settlement suggestions

Here, in 22 tips, is a small sample of the many ways Negotiating with Insurance Companies will help you maximize the value of your clients’ claims:

1. Get an expert opinion on causation early in the case. In complicated medical causation cases (e.g., cases in which your client has a long history of pre-existing conditions), have your client’s medical records reviewed by a medical expert who can then draft a letter that clearly explains and documents the cause of the plaintiff’s medical problems as related to the accident. By sending such a letter to the adjuster early in the case, you often can eliminate many common causation arguments before they are made and prevent the carrier from entrenching itself into a position that becomes difficult for you to undo. [§6:25]
2. Never paraphrase policy language. When presenting a coverage argument to an insurance carrier, never paraphrase the policy language. Use and interpret the exact words and phrases written in the policy, and relate the facts of your case to that specific language. [§2:13]
3. Use the adjuster’s own words. Adjusters often make outrageous statements that do not comport with the reality of the case. When you hear something like that, resist the urge to argue. If you listen carefully, you will pick up on what I like to call “leakage” – words or phrases that poke holes or reveal defects in the adjuster’s arguments. Write them down. Later, you can use those very words against the carrier in a letter to the adjuster or a complaint to the Department of Insurance, if warranted. [§3:34]
4. Update your settlement demand in advance of mediation. You file a lawsuit and tell the carrier that all your pre-suit settlement proposals are “off the table.” If you do not reinforce that position by presenting the carrier with a new demand in advance of the mediation, you are setting yourself up for failure. Regardless of what you may have said previously, the carrier will come to the mediation . . . [§7:02]
5. File a detailed consumer complaint with your state’s Department of Insurance. If the claim is not one you want to litigate, but the offer is simply unreasonable, send the adjuster a letter, asking him to explain why he believes the carrier’s offer is reasonable and why your client should accept it. If the adjuster cannot or will not explain the carrier’s position, send a detailed letter to your state’s Department of Insurance, along with a request for assistance. This kind of complaint, especially when a copy is sent to the carrier, will trigger . . . [§3:53]

Personal auto claims

6. Your client is entitled to “loss of use” of his vehicle; don’t fall for bogus arguments to the contrary. Claimants with auto damage claims generally are entitled to recover for “loss of use,” whether they rent a vehicle or not. Therefore, you should always assert the loss of use claim because it will put several hundred extra dollars in your client’s pocket. The carrier may try to avoid the loss of use claim if your client has a second vehicle in the household that is available for him to drive, by arguing that there really is no loss of use. Don’t fall for this argument; it’s bogus. Likewise, your client is entitled to rent a vehicle of like kind and quality. The carrier may argue that it is only responsible to provide basic transportation (especially if your client is not renting a vehicle). Don’t fall for that bogus argument. [§8:21]
7. “Total loss” value includes special equipment. Whatever you do, do not allow the insurance company to declare a vehicle a total loss, but refuse to pay for non-standard equipment, without either (1) getting compensated for that part of the loss from the third party or (2) . . . [§8:45]
8. Maximize the value of no fault coverage to your client. If your client has been incapacitated from working and has medical payments coverage under an auto policy or has a health insurance policy or both, you may want to instruct the insurance company to reserve your client’s no fault coverage to pay for wage loss only. Unless there is a disability income policy, your client will not be able to collect wage loss under the medical payments coverage or health insurance coverage. Thus, reserving the no fault benefit to pay for wage loss maximizes your client’s benefits and provides a steady income while he is recovering from his injuries. [§8:111]

Commercial auto/truck claims

9. Take advantage of all available uninsured motorist coverage. In a commercial vehicle case, if there are multiple policies of uninsured motorist coverage available, then you will need a strategy for approaching them. If, for example, there is a stacking provision in one policy but a non-stacking provision in another policy, you must decide which uninsured motorist claim to file first. The answer, in this situation, is to . . . [§9:83]

General liability claims

10. Be aware of supplementary coverages. Supplementary coverages on a homeowner’s policy typically will pay for such things as: costs taxed against the insured in any suit that the insurance company defends; interest on the entire judgment that accrues after entry of the judgment; expenses for first-aid provided to a third party; and replacement costs, up to $1,000 (sometimes more) per occurrence, for damage to the property of others caused by an insured. Insurance carriers often overlook supplementary coverage benefits, and do not pay these benefits or even inform their insured that they exist. [§10:51]
11. If you are dealing with a “wasting” policy: Some policies, particularly those that provide professional liability coverage for attorneys, doctors, and nursing homes, provide that the costs of defense will be deducted from the limits of liability coverage provided in the policy. This results in the dwindling of the coverage available to compensate your client. When dealing with such “wasting” policies, the best course of action is to establish, as early as possible, that your client’s damages exceed the policy or what may be left of the policy, and then . . . [§10:83]
12. Find stand-alone coverage under an umbrella policy. Some attorneys limit their thinking about umbrella policies to “excess” coverage; however, an umbrella policy can also serve as a stand-alone liability policy. That is, even where there is no coverage under any of the underlying policies, there still may be coverage under the umbrella policy if . . . [§10:102]

Own occupation disability claims

13. Use a systematic approach. Dealing with the issues that arise in an own occupation disability income policy requires a step-by-step, “move and counter move” process. You must exert control in the claims handling and submitting process from its inception, or your client will be at the mercy of the carrier. I have developed a multi-prong approach to filing an own occupation disability income claim. When followed to the letter, this methodology usually results in the client being put on claim, and staying on claim, without the necessity of litigation. Here is how it works . . . [§12:10]
14. “Less is more” when completing the application form. My advice for filling in the blanks of the initial application form is to use the words “see attached records” or “see attached attorney letter” wherever you can. Scrutinize the form carefully, keeping in mind that your client is seeking benefits under an “own occupation” disability income policy. Interpret every question in that context and provide only the information that is relevant in that context. For example . . . [§12:50]
15. Sometimes “guerilla” tactics work best with IMEs. This is especially true if you are representing a physician, an attorney, or other professional who can be held liable for malpractice. In such cases, it is not out of line to add an additional paragraph to your letter to the IME, with language warning that, should your client commit malpractice, the IME also could be held liable. I guarantee the IME will think twice, and maybe three or four times, about whether he wishes to accept the assignment so generously bestowed upon him by the insurance company. By way of example, I had a case involving a chiropractor . . . [§12:95]
16. Resist premature buyout overtures. If the carrier offers you $.20 or $.30 on the dollar to buyout the policy, then it is too soon to be engaging in buyout discussions. Respond with a polite, “Sorry, but my client is not interested and would rather get his monthly benefits.” Whatever you do, this is not the time to make a counterproposal. Rather, your mantra to the carrier should be: “You’re going to have to do a lot better than that to get my client’s interest.” This suggests there might be a number less than 100 cents on the dollar that your client is willing to accept. Do not reveal that number just yet. Let the carrier continue to “bid against itself” until it gets to a number that starts to pique both your and your client’s interests. [§12:113]

Homeowners and commercial property claims

17. Don’t allow your client to be victimized by a carrier trying to manufacture an arson defense. Some carriers will delay or resist payment of fire claims and use arson as an excuse, even when there is little evidence to suggest that the insured had anything to do with the fire. The best way to turn the tables on an insurance company that resists payment of a fire loss claim is to immediately file suit and aggressively litigate the case. Focus your discovery on . . . [§14:32]

Bad faith

18. Request production of unofficial files and field notes. If you simply ask for the “claims file” and all related materials to be produced, you may not get the local field notes of the adjuster or other claims personnel who may have been involved in the handling of the claim. Those files typically are kept as personal files by the individuals working the case. Therefore, in addition to the claims file, you also need to request all notes, files, memoranda, and electronic data that any person who was involved in the handling of the claim may have kept separate and apart from the actual claims file. [§15:52]
19. Create your own claims procedures manual. Request copies of all standard operating procedure manuals or claims manuals that may be germane to your case. Sometimes an insurance carrier will deny your request, claiming not to have a claims procedures manual. Don’t believe it. All insurance companies have guidelines they want their adjusters to follow. If the carrier persists in its claim that it does not have or use any such manuals, make one for them. Put together a “Model Claims Handling Manual” and use it as a basis for questioning claims personnel during depositions. To create your Model Claims Handling Manual, assemble the following materials: . . . [§15:60]
20. Request all documentation relating to the “reserve history” for the claim. Even if it takes many months of battling to get the claims file, if you have the reserve history on the file, you can learn a lot. Compare the reserve history to the files from the underlying case. You will be better able to interpret what the reserve history is telling you when you can see what information was provided to the carrier and when. For example, if the insurance company carried a low reserve on a file for a year, long after it had received sufficient documentation to justify an upward adjustment of its reserve, then you know . . . [§15:55]

Negotiations after the case settles

21. Protect minors from subrogation claims by health insurance carriers. First, advise the Guardian ad Litem that there is a subrogation claim (or lien or claim for reimbursement) pending with a health insurance carrier, and that it would be in the minor’s best interests not to have to pay this. The Guardian ad Litem will usually agree and report this fact to the judge. Next, send a Notice of Hearing to Approve Settlement to the third-party subrogation administrator or to the insurance carrier, along with a copy of the petition and an invitation to attend the proceeding. If, as frequently happens, the health insurer does not bother to send anyone to the hearing, the judge will rule in favor of the minor, and you will have a court order cutting off all claims by the health insurance carrier. [§16:47]
22. Send a zero-balance letter unless . . . Send all medical providers (or collection agencies) that you are aware of some form of a zero-balance letter, announcing that the case has been resolved and requesting an itemized list of any outstanding bills be provided within a set period of time. If there is no response within that time limit, you may choose to ignore that provider and commence disbursement of settlement funds. Do not, however, ignore an outstanding bill from a provider for whom you have provided a letter of protection, as this could constitute improper handling of trust funds. In that situation, a better course of action is to . . . [§16:61]

REVISION 1 HIGHLIGHTS

New material in this update includes:

CHAPTER 2 COVERAGE ISSUES
How Efficient Proximate Cause Can Affect Coverage
• Fact Scenario (§2:15)
• Efficient Proximate Cause Defined (§2:16)
• Application to Fact Scenario (§2:17)
Texting While Driving
• Fact Scenario (§2:94)
• Claimants and Claims (§2:95)
• Coverage Analysis (§2:96)
• Studies on Distracted Driving (§2:97)
Internet Sales of Automobile Insurance
• The Problem (§2:110)
• Establishing an Electronic Signature (§2:111)
• Uninsured Motorist Coverage: Typical Requirements (§2:112)
• What Can Go Wrong During the Online Purchasing Process (§2:113)
• The Carrier’s Motives (§2:114)
• Before Online Sales (§2:115)
• How to Investigate Your Client’s Online Purchase (§2:116)

CHAPTER 3 NEGOTIATING STRATEGIES AND TECHNIQUES
Situations That Go Beyond the Lowball Offer
• Facts (§3:56)
• The Settlement Proposal and Carrier’s Initial Offer (§3:57)
• The Plaintiff’s Response with Three Sample Letters (§3:58)
• The Resolution (§3:59)

CHAPTER 4 INITIAL CONTACTS
• Don’t Overpay for HIPAA Protected Medical Records (§4:42.1)

CHAPTER 10 GENERAL LIABILITY CLAIMS
Social Media, Cyber Stalking and Bullying
• Fact Scenario (§10:42)
• Claims (§10:43)
• Intentional Acts Exclusion (§10:44)
• When the Injury Is Emotional (§10:45)
• Coverage Expansion (§10:46)

CHAPTER 12 “OWN OCCUPATION” DISABILITY INCOME POLICIES
• Is a Patient-Physician Relationship Established When an IME/DME Examines your Client? (§12:98)

CHAPTER 13 NON-ERISA HEALTH INSURANCE CLAIMS
• What Is the Statute of Limitations for an ERISA Lien (§13:05)

CHAPTER 14 HOMEOWNERS AND COMMERCIAL PROPERTY CLAIMS
• ISO Changes Water Damage Exclusion in HO3 (§14:56)

ABBREVIATED TABLE OF CONTENTS

Chapter 1: Predictive Software
Chapter 2: Coverage Issues
Chapter 3: Negotiating Strategies and Techniques
Chapter 4: Initial Contacts
Chapter 5: Presenting a Settlement Proposal
Chapter 6: Litigation
Chapter 7: Mediation
Chapter 8: Personal Automobile Insurance Claims
Chapter 9: Commercial Auto/Truck Claims
Chapter 10: General Liability Claims
Chapter 11: Big Damages; Bad Liability
Chapter 12: “Own Occupation” Disability Income Policies
Chapter 13: Non-ERISA Health Insurance Claims
Chapter 14: Homeowners and Commercial Property Claims
Chapter 15: Bad Faith
Chapter 16: Negotiations After the Case Settles

ABOUT THE AUTHOR

Joseph L. Vaccaro has over 40 years of insurance claim handling experience. He served 11 years in the claims department of one of the nation’s largest insurance companies, handling and supervising adjusters in casualty claims in all lines of both personal and commercial insurance. During the following 28 years he worked for two prominent plaintiff law firms as head of their pre-litigation departments before starting his own consulting firm in September of 2008.

Mr. Vaccaro still maintains a current adjuster’s license, and carries the following professional designations recognized in the insurance industry:

• Casualty Claim Law Associate (CCLA).
• Commercial Lines Coverage Specialist (CLCS).
• Personal Lines Coverage Specialist (PLCS).

Joe is a prolific writer on insurance-related topics and is frequently invited to speak at continuing education and other seminars for attorneys and paralegals. He now consults in matters involving insurance policy disputes, insurance bad faith, mediation/negotiation strategies, and provides expert services on behalf of policyholders.