Post-Claims Underwriting is a notorious tactic used by insurance companies to bait unwary consumers into forking over thousands of dollars of premium, only to have the insurance company decide, after a claim is made, that they didn’t want to insure you after all. This happens when insurance companies, in their quest to sell as many policies as possible to consumers, ask very few questions before agreeing to insure the consumers and then collect millions of dollars of premiums. Then, after a claim is made, the insurance company asks many questions to “evaluate the risk”, which is what an underwriter is supposed to do before the risk is accepted. This is called: post-claims underwriting”.
By using post-claims underwriting, insurance companies search for reasons to deny claims by asking questions that should have been asked before the policy was sold and premiums paid. Had the consumer understood the risk of non-coverage before they agreed to purchase the coverage from company A, the consumer could have made an informed decision and purchased coverage from company B or C.
We here at Burg Simpson have recently seen a spike in post-claims underwriting happening in health insurance policies, and particularly short-term medical policies. However, post-claim underwriting also happens with property insurance, business insurance, and lots of other kinds of insurance.
Colorado insurance law prohibits insurance companies from misrepresenting and falsely advertising their insurance policies. Insurance companies are required to act in good faith, at all times. This includes conducting “reasonable investigations” and promptly paying all claims that are owed. In Colorado, if an insurance company denies or fails to timely pay all benefits that are owed, without a reasonable basis, they can be sued and required to pay not only the benefit owed, but also a penalty of TWO TIMES that benefit – for a total of THREE TIMES the benefit owed, plus attorney’s fees and costs.
Post-claim underwriting often is bad faith conduct by the insurance company. If you believe you’ve been a victim of post-claims underwriting, please contact us here at Burg Simpson for a free consultation.
Visit our Bad Faith Insurance page for more information.