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    Insurance Companies Behaving Badly


    How we got one to pay for this pollution claim

    Our best chance to help clients comes from managing risk and negotiating insurance before something happens.  But, sometimes we get called in after a claim. In this one, an employee had run a pallet jack into a heating oil tank, creating an environmental situation.  The insurance company refused to pay for  the clean up.

    The claim denial was based on a pollution exclusion in the policy. It was an implausible denial; there were convincing ways to show that the exclusion shouldn’t apply.  We decided on an alternative strategy.  By making the claim under debris removal we could give the company a chance to pay the claim without admitting they were wrong in interpretation of that exclusion.

    We sent the letter on November 8th.  After numerous follow ups we got a response dated December 12th. The response was short and to the point – “an oil spill is not a covered cause of loss, no costs to clean up are covered.” The adjuster did not support this with policy language, he merely made this statement.

    If you can’t read the policy, you would probably have to accept this denial, assuming that the insurance company knows what they are talking about. But, in truth you are not supposed to read the policy, and if you can, it’s difficult to navigate.  Claims adjusters and brokers have very little training in coverage interpretation,  and there is no reason to assume they are right. We took this over the adjuster’s head, and showed the logic by careful reference to policy language. The claim got paid.

    Taking advantage of policyholders on claims that are not big enough for law suits is too common. We can make the insurance industry behave for you.

    -This post was written by Abby Krueger of LicataRisk Advisors.  Contact Abby with questions or comments at [email protected]

    Feb 13, 2015

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    LicataRisk Advisors is an independent risk management and insurance consulting firm. We are not brokers and we do not sell insurance. We are not connected to any insurance company or product in any way and do not receive commissions. This is an important difference as you will have an expert on your side who is only committed to you.

    Licata Risk is not a law firm and does not practice law. General advice and contract input by the consultants, including those who are attorneys, is to provide insight into the risk and insurance aspects. Your attorney should be the final authority on any legal matter.