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March 1, 2015

Recently, one of our clients who owns a number of apartment buildings was sued by a tenant for personal injury. Our client had purchased insurance for the building, and had paid the premium, so he tendered the claim to his insurance company. He was confident the insurance company would take care of the claim. After all, that is why he had purchased insurance. He was in for a shock.

It turned out, there was a mix up when he purchased the insurance, and the insurance company failed to name our client as the insured on the policy. Our client was not covered for this injury, and he was worried about what to do next. Faced with the possibility of having a judgment against him, he came to see us.

We were hired to persuade the insurance company to do the right thing – to cover our client for this injury which should have been covered but for the clerical mix up. I contacted the insurance company to suggest settling the claim. The tenant did not suffer a major injury. It would be cheaper to settle than to fight with us in court on whether there was coverage. The insurance company ignored my suggestion. So we fought back.

We filed an answer to the personal injury claim of the tenant, a counterclaim lawsuit against the insurance company, and a third party lawsuit against the insurance broker for charging our client the insurance premium, but failing to provide coverage for our client. We initiated discovery and noticed up depositions of the parties. Suddenly, all of the parties realized that this matter should be resolved.

The insurance company settled the claim with the injured tenant. It then amended the insurance policy to name our client as the insured. The insurance company agreed to pay our client’s attorneys fees in full, including paying the retainer our client paid us.

Most denials of insurance claims do not involve facts as clear as in the above case. Insurance companies usually deny claims based upon language provisions in the policy, and the failure of the insured to comply with such policy language. Among the reasons set forth for denial of coverage is the failure to timely renew the policy, failure to pay the premium, a claim that another insurance company is primarily responsible, or a claim that the insurance company is not responsible for intentional conduct or claims for punitive damages. Quite often the basis for the denial of the claim is found under the AExclusions@ listed in the policy.

In some cases the reason for the denial involves a mistake as to the facts. The insured can deliver a copy of a canceled check that proves that the insurer received the check on or before the grace period had expired. Where the facts are clear, the insured need only contact his insurance agent to clear up the mistake.

However, most denials of claims involve interpretation of the terms of the insurance contract, application of the insurance law of the state, issues of public policy, and other related questions.

If you receive a denial of claim, assemble the denial letter, declaration page, and the insurance policy, then come see us. Your insurance coverage attorney will examine the foregoing documents, and be able to give you an opinion as to the merits of the insurance company’s denial. If the matter is not resolved expeditiously, it is highly likely that you will be able to recover the attorneys fees that you expended if the insurance company has wrongfully denied your claim.