Insurance Companies Make Money By Not Paying Your Claim

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UPDATED: Feb 9, 2020

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Written By: Jeffrey JohnsonUPDATED: Feb 9, 2020Fact Checked

We’ve all seen the television ads showing insurance agents meeting their policyholders at the seen of an auto accident at 3 a.m. and getting their claim paid the next day. While that actually may happen, the truth is that those situations are the exception and not rule – because insurance companies make money by not paying your claim.

Giving is not always better than receiving

While the sentiment of giving being better than receiving still rings true in a personal context, it’s the opposite when it comes to insurance. Policyholders give insurance companies billions of dollars every year in the form of premiums to protect them from a risk, yet many don’t receive anything when that risk materializes into an injury. Insurance companies are notorious for denying, delaying and refusing to pay valid claims – simply to keep those premiums and increase their bottom lines. Unfortunately, some of the largest insurance companies are the worst offenders.

Bad faith insurance tactics

Some of the nation’s biggest insurance companies—Allstate, AIG and State Farm (among others)—have denied valid claims in an attempt to boost their bottom lines, according to a recent American Association of Justice (AAJ) publication which said, “These companies have rewarded employees who successfully denied claims, replaced employees who would not, and when all else failed, engaged in outright fraud to avoid paying claims.” In fact, the report says that long term care insurance companies are some of the worst offenders when it comes to bad faith tactics and quoted one regulator as saying, “[T]he bottom line is that insurance companies make money when they don’t pay claims…They’ll do anything to avoid paying, because if they wait long enough, they know the policyholders will die.”

If your insurance company has denied your valid claim, contact an experienced bad faith insurance law attorney to discuss your situation. Consultations are free of charge, without obligation and are strictly confidential.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

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