How to File an Insurance Claim

by Nicholas Walsh, PA

The first rule of insurance claims is that if you have the slightest doubt that you might have insurance coverage for the claim, make the claim. Insurance companies have legal staff who do little more than analyze whether a submitted claim fits into the insurance policy. The companies understand that courts take it very unkindly if there is a wrongful denial of coverage, so the companies do not deny coverage unless there is a solid basis for doing so. So make the claim and then see what the response is – let the insurer tell you there is no coverage instead of assuming that is the case.

There are two fundamental types of insurance claims. In what is known as a “first party claim”, you (the first party) might claim for some sort of loss to your own property, or under your health insurance, disability insurance etc. Making such a claim is straightforward: simply communicate the facts of the claim to your company. If you look at the policy, or go online, you will find the address for submitting claims. You can also submit a claim to your agent, and because the agent is quite literally the agent for the insurer, a claim submitted to the agent is the same as a claim submitted to the insurer itself. Just make sure the agent forwards the claim to the insurer – some agents are more reliable than others and mistakes do happen. I prefer to go straight to the insurer.

Make a claim promptly after incurring the loss. While the claim is pending, you are obliged to do what you reasonably can to minimize further loss. For example, if a tree limbs tears a hole in your roof, as soon as it can safely be accomplished you should try to put a temporary patch over the hole. The company will reimburse costs, including if you hire a contractor, if the cost probably was necessary to avoid further loss.

A “third party claim” occurs when one person is injured or that person’s property is damaged by another person and the injured person makes a claim against the “third party.” For example, if you run a red light and hit another car, the other driver – the “third party – makes the claim. Such a claim is often commenced with a letter from a lawyer to the first party (you), stating the facts and suggesting that the first party make the fact of the letter known to his or her insurance company.

It is no fun to get such a letter, but there are some rules. First, if you have insurance make the claim. Even if for whatever reason you believe the claim is not covered, make the claim. Even if you think the coverage lapsed, make the claim. Remember, that’s rule number one: if in the slightest doubt, make the claim.

Maine law imposes two different duties on insurance companies whose customers are sued. The first is the “duty to defend”, which means your insurance company hires a lawyer for you. That duty applies if under any fair reading of the facts of the claim, the damages sought in the lawsuit are covered under the policy. It’s a very broad duty, and goodness knows if you are getting sued it is nice to at least have the insurance company pay for your lawyer. Surprisingly often the duty to defend will apply in circumstances where it seems not to exist – so make the claim.

The second duty of insurance companies is the duty to indemnify. That’s the duty to pay money to settle a claim, or pay the judgment amount (up to the policy limits) if it comes to that. The duty to indemnify is much narrower than the duty to defend. For that reason it is not unusual for an insured who puts in a claim to get a letter from the insurer stating that it is defending the claim under a “reservation of rights”, which means it is defending but reserves the right later on to decide it has no duty to indemnify. That actually can be ok (or not), because if the plaintiff’s lawyer knows that there may not be insurance coverage to pay a judgment, that can assist the defendant in settling the case ahead of trial. (Insurance companies defending under a reservation of rights will still, often, pay some money to settle the claim.) Unless the defendant has deep pockets, a plaintiff’s lawyer may be happier taking a nice prompt insurance company check rather than getting a judgment, finding the defendant has no insurance coverage for the judgment, and chasing the money.

If you get sued, make a claim, and are simply denied coverage,I suggest you hire a lawyer to scrutinize your policy and try to convince your insurer that it has a duty to defend or defend and indemnify. If the claim is serious, you should absolutely do this. There are all sorts of potential consequences to insurance companies denying an insured’s claim and a good lawyer may be able to take advantage. This is no place for a novice lawyer, bear in mind. Ask around and get someone experienced and good.

If you get sued and submit a claim, be careful what you say or write to your insurance company. The plaintiff may be able to find out what you said or wrote when you got the claim, so if you write “It’s all my fault”, the other side will be very happy. Better just to submit the claim with the barest facts, or maybe write, as I do when submitting a claim on behalf of a client, “Although I am confident on the facts and the law that the claim is baseless . . . “ and then present the case.

If you want to spill your guts out, wait until you are alone with your lawyer. Or talk to your wife or husband – what you say privately to him or her is privileged from disclosure. Loose lips lose lawsuits.

One final word. If your insurance company hires a lawyer for you, that person is your lawyer, not the insurance company’s lawyer. Having said that . . . if you have a big bad claim against you, and especially if you have a serious claim against you that is being defended under a reservation of rights, I would strongly suggest your hire your own lawyer to assist you in coverage issues, for advice on settling etc. (So you’d have two lawyers.) Such a lawyer may be able to persuade the insurer to provide indemnification coverage. And if down the road the insurer has the opportunity to settle the claim within the limits of liability of the policy, additional obligations accrue to the insurance company, serious obligations that your private lawyer may be able to take advantage of.

Let me bottom line this. If you have a serious claim against you, whether the claim definitely falls under your insurance or may do so, hire a lawyer.

Nicholas Walsh is an admiralty attorney with an office in Portland, Maine. He may be reached at 207-772-2191, or nwalsh@gwi.net.