Effective communication with an insurance company is one of the best tools available to successfully resolve claims. I have heard time and time again from insurance adjusters and defense attorneys that poor communication is one of the chief reasons that claims are undervalued and low settlement values are assigned. I outline some basic tips for effective advocacy.
The importance of effective communications was recently affirmed in a recent conversation I had with a seasoned and highly regarded first-party property defense attorney for insurance carriers. During our conversation we discussed an eight-figure commercial property claim the defense attorney handled during the claim process and was now defending in litigation. I was familiar with the claim and I was also aware that the insured’s attorneys had a reputation for going out of their way to focus on the insurer’s conduct instead of focusing on coverage and the damage valuation. The defense attorney’s complaints about the insured’s attorney are a lesson in effective communication.
The specific statement about the insured’s attorneys was this:
The insured just keeps arguing bad faith. You see it all the time, when they have good facts and law, they argue the facts and law. When they have bad facts and law, they argue bad faith.
Knowing a bit about the claim, the problem was not that the insured had bad facts and law, the problem was that the insured was a poor communicator. The result of the bad communication was the insurer’s assumption the insured had no claim. As a policyholder advocate, one of the worst outcomes we can have is a failure to communicate the strength of our position. Here are two important factors to keep in mind when communicating with insurers and framing the claim.
Always lead with the facts and support them by remembering to say “because.”
Always lead with the facts. If there is law supporting coverage, trumpet that too. A claim adjuster and a defense attorney are paid to evaluate risk. The number one way to get attention that money is owed is to plainly set forth what the facts are supporting your claim. Dropping in language in about an insurer’s conduct and about the insured’s feelings get in the way. This type of talk may make you feel assertive and give you confidence that your client thinks you are a zealous advocate. But this type of communication may also bury your point, as the insurer may think you are arguing bad faith because you have no facts or law. An easy way to stay focused is to remember to say “because.” For example, don’t just say, “The house is unlivable, and the insured is entitled to additional living expenses.” Add, “…because the insureds cannot use the kitchen and there is no hot water.”
Never use word the bad faith; instead explain why the conduct violated the law and what law it violated.
Rather than accusing an insurer of acting in bad faith, communicate why the insurer’s conduct violated the law. One of the best tools you can use is state laws and regulations governing an insurer’s conduct. For example, don’t say, “you wrongfully applied depreciation in bad faith.” A better to way frame this is: “Cal. Code Regs. § 2695.9(f) requires that depreciation apply only to property normally subject to repair and replacement during the useful life of the property. Your estimate has depreciated labor. Your depreciation of labor violates Cal. Code Regs. § 2695.9(f).” This explains and supports your point, has teeth, and puts the insurer’s conduct in the crosshairs.
Not only will arguing facts and law help you get to the point faster, it will lend you more credibility. So, get into the habit now and watch the results.