With greater frequency I am getting calls from policyholders concerned their insurers’ claims investigations are more focused on finding reasons that support denial than coverage. Also, more claims are hastily or unnecessarily referred to the special investigation unit (SIU) when evidence of fraud is lacking. Most claims that end up in SIU come to a screeching halt, with no resolution in sight.
All policyholders are entitled to a full, fair, and thorough investigation of their claims. This fundamental tenet of insurance is rapidly dissipating. When an insurance company does not fulfill its obligation to conduct a proper investigation, they’re not acting in good faith.
When proving the insurance company’s failure to properly investigate a claim, it is important to determine whether the insurance company has diligently searched for and considered evidence that supported coverage of the claimed loss.1 An insurance company "must give at least as much consideration to the interests of the insured as it gives its own interests."2 Moreover, when an insurance company" seeks to discover only the evidence that defeats the claim it holds its own interest above that of the insured."3
In the representation of policyholders, it is vital to keep the above in mind. If the insurance company is overlooking evidence that supports coverage, then that has to be brought to their attention. Call them out on it.
1 CACI Jury Instruction No. 2332. Bad Faith (First Party) — Failure to Properly Investigate Claim.
2 Frommoethelydo v. Fire Insurance Exchange (1986) 42 Cal. 3d 208, 214-215.
3 Mariscal v. Old Republic Life Ins. Co. (1996) 42 Cal. App. 4th 1617, 1620.