First Party Insurance

What Are Some Common Issues in First Party Insurance Claims?

Although policyholders pay premiums for their coverage, insurers may be reluctant to pay out claims. The following are common issues that can arise in first party insurance claims:

• Denials: An insurance company may deny a claim outright, claiming that the event or damage is not covered under the policy or that the claim was not properly filed. As an example, a roof damage claim may be denied on the basis that the damage was caused by wear and tear rather than by a covered event, according to the insurance company.
• Undervaluing claims: The insurance company may acknowledge the claim but offer a settlement significantly lower than the actual value of the losses. This is a common occurrence in auto insurance claims when insurers offer settlement amounts that do not reflect the true costs of repairs or replacement. 
• Delay tactics: Some insurance companies may intentionally delay processing claims, creating financial strain and a type of pressure on the policyholder to accept a lower settlement. This tactic is not uncommon with health insurance claims, in which timely payment is necessary for ongoing medical treatment.
• Bad faith practices: An insurance company that fails to uphold its obligations under a policy is acting in bad faith. These acts may include failing to investigate a claim properly, failing to pay a claim without a reasonable basis, or misrepresenting the language of a policy to avoid a payout.