- Insurance Company Claim: “That was a one year policy issued in 1955. It expired over 50 years ago.”
Policyholder Response: “Comprehensive General Liability policies written on an occurrence form are ALWAYS IN EFFECT to cover costs of cleaning up environmental releases that occurred during the policy year.”
- Insurance Company Claim: “You’ve got the wrong carrier. We’re just the American division of a Bahamas subsidiary of a Swiss holding company wholly owned by a Bermuda “partnership” managed out of Hong Kong."
Policyholder Response: “In periods of consolidation, the merged carrier succeeds to the liabilities of the predecessor. For example, Travelers Insurance Company responds to Aetna Casualty and Surety Company claims. Even insolvent carriers may pay something through the state guaranty fund.”
- Insurance Company Claim: “Do we know you? We don’t see your name on any of our policies.”
Policyholder Response: “Companies that have grown by acquisition succeed to the insurance rights of the predecessor company.”
- Insurance Company Claim: “We’re too busy investing your premiums to pay your claims.”
Policyholder Response: “Carriers have lots of money and have shown record profits. They like to play the “delay game” to avoid paying claims. They cannot act in bad faith."
- Insurance Company Claim: “That’s not an insurance policy. That’s my first grader’s art project.”
Policyholder Response: “Policyholders can reconstruct lost policies using secondary evidence.”
- Insurance Company Claim: “Our mission statement states that all claims must be denied for one reason or another. If the first reason doesn’t work, we’ll find another.”
Policyholder Response: “Policy language is subject to interpretation. State-by-state law differs on key policy provisions including the pollution exclusion, number of occurrences, trigger of coverage, etc.”
- Insurance Company Claim: “Our counselors at the Psychic Friends Network advised us not to pay.”
Policyholder Response: “Insurance companies hire coverage lawyers so be prepared to retain your own coverage counsel to match analysis with analysis. Don’t be impressed with technical defenses. Late notice of the claim is often raised with little merit.”
- Insurance Company Claim: “Make me!”
Policyholder Response: “Almost always, a negotiated settlement gives a better overall result than litigation. It’s faster, less stressful, money goes to the policyholder, not lawyers, and long-term relationships are fostered. Sometimes litigation is necessary, so choose favorable jurisdictions when at all possible.”
- Insurance Company Claim: “The policy limits were in pesos. Our printers do not print checks with that many zeros after a dollar sign.”
Policyholder Response: “Claims are larger than you think. Be sure to include all past costs, known future costs and the value of contingent liability assumed by a policyholder.”
- Insurance Company Claim: “You didn’t say PLEASE.”
Policyholder Response: “Present the claim in a manner that reflects the policy language and the law in the state. Know the insurance carrier’s propensity to settle, and their decision-making structure internally.”
Top 10 Reasons Insurance Companies Claim They Don’t Have to Pay Environmental Claims Under Historic Insurance Policies and the Policyholder’s Response (with a little humor thrown in)
For the past 30 years, policyholders and insurers have been fighting over insurance for environmental contamination. This list of helpful tips is a good review of lessons learned.
Lori Siwik and Mark Siwik are the founders of SandRun Risk. They apply the principles of vertical leadership and lean six sigma to the discipline of risk management. From time to time they share their blog with guest authors who write about important risk management principles.