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