I am often asked – if there was one mistake I could help people avoid in making insurance claims, what would it be?
The answer is easy. Do not take communications with your insurance company casually. The may not be trying to help you, and insureds are often surprised by aggressive questions during so-called “recorded statements.” Be careful when carriers ask for one.
Insurance companies often ask for details or interviews when investigating a claim. Often, such requests seek information that may affect whether or not a claim is covered under your policy – whether it is an auto, homeowners, or property loss. Your response – or failure to completely respond – can affect your coverage, so be careful.
If your carrier asks for documents or consent forms
Although it may surprise you, many courts in many states including Virginia have held that insurance companies can sometimes delve deeply into your finances, as well as into other details that may bear on whether they might say you are trying to make a fraudulent claim.
Moreover, under some of those cases, your carrier can sometimes deny your claim simply because you failed to respond to a reasonable request. Since your definition of what is reasonable may differ from what the law says, you may be wise to either respond or ask a lawyer to help you decide what you can fairly keep from sharing. Whether you want to pay a lawyer may depend on your claim’s size.
Insurers often ask for: bank records, credit card statements, mortgage information, tax returns, past bankruptcy information, and in some cases, items like phone bills. You will put your claim at grave risk if you completely refuse to share any such information. That said, your carrier probably is not entitled to have all that information going back ten years (assuming you have it) or getting some of that data from after the claim.
Insurers may also ask you to sign consent forms so their private investigator can collect information you may no longer have from your banks, creditors, and other places. Refusing to sign any consent at all could also lead to your claims’ denial, but these consent forms can go far beyond what the insurance company should have any right to look at.
If you get asked to sign such a form, and you have a big claim, you may want to seek a lawyer’s help. At the very least, you may want to ask that the consent only allows access to records from the current and prior year – at least at first. And you should ask that the consent expire within ninety days. You don’t want them to use it to get your private data a year from now.
Also, watch out for consents that waive attorney-client privilege, your privacy rights, your law enforcement rights, your privilege against self-incrimination, or any other constitutional right – you shouldn’t have to sign such consents. If it looks like you are giving up a lot of rights, you may be giving away too much. After the first round for requests, the carrier may have follow-up questions. If the insurance company is willing to keep spending money to investigate, that can hint they may be planning to deny your claim. Be careful in what you do next.
Beware the recorded statement
Carriers frequently ask for recorded statements after a claim is made – often shortly after. Take care when they do. Here’s why: they seem informal, but they aren’t.
First, some carriers no doubt employ this tactic: request multiple statements from an insured, then use the inconsistencies that always happen when someone tells their story more than once as grounds to claim you lied during the claims process. That alone can lead to a denial.
Second, insurers usually have trained questioners take the statements. You should expect tricks and traps, and be ready for an aggressive style with detailed personal and financial questions. Your refusal to answer questions, or conflicts between your answers, or conflicts between an answer and documents all can lead them to deny your claim – whether fairly or not.
Third, most policies do not specifically require that you provide recorded statements. You have a general duty to cooperate and provide information, but policies often require only an “examination under oath” – a formal statement to a court reporter who makes a written transcript. Those cost more money to take, in part because attorneys usually take them, so insurance companies are less likely to use them as a fishing expedition or simply to create contradictory statements.
Depending on your facts, you may want to tell your carrier that you are happy to speak with them, but only through an exam under oath. But use care. If you give such an exam, you should probably pay for a lawyer to sit with you. The insurer will probably have their lawyer take the exam.
Whatever you do, do not assume the carrier is on your side when they ask to record your statement. Assume it is working against you until facts prove otherwise.
Taking an examination under oath
Exams under oath cost insurance companies money. They have to pay hundreds if not thousands to a court reporter to transcribe what you say. They may have to pay a lawyer hundreds per hour to prepare for and take the exam. So if an insurance company decides it is worth its money taking such an exam, it is worth your money hiring your own lawyer to help you when they do.
Carriers have lawyers who can use aggressive, trained questioning methods that can hurt your claim. The law may sometimes allow them to explore your personal finances, medical history, past insurance claims, or other topics you may not want to discuss, even though you have done nothing wrong. Perhaps most importantly, if the insurance company decides – whether justified or not – that you are bringing a false claim, that can expose you to criminal liability.
You may want a lawyer there working for you who understands what they can ask and object when they go beyond the line. A lawyer can also protect you against questioners who use an abusive tone or harsh words to rattle you. If a questioner hits a sensitive topic (and even people making valid claims can have them), a good lawyer can help minimize the damage to your claim.
Remember this – your claim’s actual validity may not matter if the insurance company can make it look fishy. And fishy may often be enough for them to deny your claim. If that happens, you may need to pay to sue them if you want to ever collect what they owe you. Spending money now can save money later.