Denying bogus claims riskier, more-costly than it seems

Matthew smith | January 4, 2018

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In courtrooms, attorneys tell jurors about the duty of insurers to protect consumers from higher premiums wrought by fraudulent claims. No matter what your background or perspective, that’s hard to disagree. I’ve just completed 32 years of legal practice and often spoke those words to judges and juries. The “real world” of denying an insurance claim for fraud, however, is far different. Insurers make mistakes and should pay a fair price for missteps. Yet denying a claim even for insurance fraud is never the easy way out. Nor, do consumers or insurers often truly “save” money. Denying a claim almost guarantees a lawsuit. In most states, the plaintiff seeks damages for both breach of the insurance contract and bad faith. The latter is a tort that can open the door to unlimited monetary damages

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