What insurance companies can't do

Tennesseeans who are victims of negligence don't always get a fair shake from state law. Too often our legislators and our courts have tipped the scales in favor of insurance companies and big business.

Nevertheless, our state has an Unfair Claims Practice law (56-8-105) that strictly prohibits deceptive and unfair practices by insurers. This is an invaluable tool that the average person can use to demand justice.

An insurance company, under this law:

  • Can't knowingly misrepresent your policy. They can't change facts or policy provisions.
  • Can't turn their back on you. They are not allowed to ignore you when you file a claim.
  • Must adopt reasonable standards for investigating and settling claims.
  • Must make good faith efforts to settle claims. They may not play games with your claim.
  • Must take your claim seriously. They are not supposed to make lowball offers that force you to litigate.
  • Can't refuse to pay on a claim without conducting a reasonable investigation.
  • Can't take forever to affirm or deny coverage of claims.
  • Can't settle claims for less than a reasonable amount.
  • Can't pay out on claims without explaining the coverage under which the payment is being made.
  • Can't drag out the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification, resulting in duplication of information.
  • Must provide a reasonable explanation for denials or compromise offers.
  • Must provide claims forms within 15 days of a request.
  • Must adopt and implement standards to assure that repairs are made in a workmanlike manner.
  • Must make workers' compensation benefit payments as required.

Now - do insurance companies follow this law?

They often do not. Their lawyers are skilled at presenting their actions and omissions in the best possible light. This is why you need a lawyer who knows the law, and who can pick apart the other side's excuses.

The law, then, is no guarantee that insurance companies won't do everything in their power to delay payment of claims, to diminish the size of your claim, or to deny your claim altogether.

But it does arm "the little guy" in a claim situation, to point out the unfairness or deceptive nature of an insurance company's actions.

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