I once represented an insurance company at a trial arising out of the company’s denial of the insureds’ claim for damage to their home. The insureds were quite sophisticated and testified that the court should rule in their favor because they had a reasonable belief that their policy would cover any damage to their property so long as their conduct did not cause or contribute to the damage. They lost.
Why did they lose? It wasn’t because they had an inexperienced lawyer. The insureds lost because they failed to understand the effect of the policy’s conditions, exclusions and endorsements on the insurance company’s promise to pay their losses. This is not uncommon given the complex manner in which most insurance policies are written.
When you report a loss or a claim to your insurance company, the company will investigate the loss or claim. In most instances the company will advise you that your loss or claim is covered. However, due to the vast number of conditions and exclusions contained in any insurance policy, you may receive a letter advising that your claim has been denied. The company may also advise you that it is reserving its rights to deny or limit coverage at a future date. This is commonly known as a reservation of rights letter.
Insurance policies are first and foremost contracts. They contain a multitude of terms, conditions and exclusions that must be read carefully and completely to determine if and how the coverage applies to your loss. Because insurance policies are complex contracts, insureds, insurers and their lawyers frequently disagree about the meaning of words and phrases used in the policies.
Thus, the fact that your insurance company has denied your claim or reserved its rights under the policy does not necessarily mean that your claim has been resolved and that you have no recourse. In most cases, the denial or reservation of rights is correct. However, the law governing the interpretation of insurance policies is complex and many issues remain unresolved by the courts. Thus, you may have a valid challenge to your insurance company’s decision.
An attorney experienced in handling insurance coverage matters can quickly assess your claim and the insurance company’s position and provide guidance for resolving the matter with the company.
For further information or to schedule an appointment, call Joyce Helock at 661-414-7123.
