Insurance is a big part of everyone’s life. It covers everything from car insurance to home insurance and life insurance. It invades almost every aspect of people’s day-to-day living. The reason is that insurance is designed to help keep people safe no matter what unfortunate events may take place. Insurance companies are expected to take care of their customers, while still adhering to the laws of their local government.
However, life doesn’t always go as planned so someone has to stand up for the insurers, their clients, or both. That is the role of an insurance defense attorney, especially legal matters arise.
What Is An Insurance Defense Attorney?
Because insurance law covers a wide range of issues that affect people’s lives every day, insurance defense attorneys have a broad range of responsibilities in turn that deal with insurance policies and claims. The duties of an insurance defense attorney fall into three very important categories:
● ensuring that insurance companies are complying with specific regulations: insurance defense attorneys work intimately with the insurance regulations of the state they work in, and keep abreast of them whenever there are any changes in the law. They work on behalf of the insurance companies to make sure that these regulations are adhered to, and inform these companies when they are not.
● ensuring policyholders are protected in the event of being sued: an insurance defense attorney will get involved in the interests of the policyholder when there are legal proceedings involving an insurance claim. For example, say a doctor was being sued for medical malpractice; the insurance defense attorney would be employed by the doctor’s insurance company to represent and defend them in the court case.
● helping policyholders figure out when insurance must pay on a claim: in the event that a policyholder accuses an insurance company of wrongfully denying a claim, then the insurance defense attorney will step in to determine whether that company must pay on a claim or not. The claim will be evaluated according to the local laws in order to determine its validity.
These duties pretty much cover every scenario that arises during an insurance claim. As stated before, insurance is included in almost every aspect of a person’s life and can be found in areas such as:
● Property and homeowners claims
● Medical malpractice
● Premises liability
● Legal malpractice
● Bad faith
● Insurance coverage
● Products and design liability
● Employment law
● Automobile third-party liability
Many other areas are covered as well, requiring a lot of legal expertise and knowledge of when laws change so that policies are adapted with them. Without these attorneys in place, insurance companies would have free reign over their policies, deny any claim that they want, and policyholders would be free to submit false claims.
Working With Insurance Companies
In order to protect their business interests, insurance companies will often hire attorneys to take care of any issues. For example, if the laws change for whatever reason or another, an insurance defense attorney can be consulted to help modify existing policies to ensure that they comply with the national regulations for each state.
Another case where an insurance defense attorney can be consulted is where the insurance company is being accused of wrongfully denying a claim.
In either of these cases, the role of the defense attorney is important to prevent and cut down on false claims and insurance fraud by policyholders.
What Happens When There’s A False Claim or Insurance Fraud?
First, it needs to be stated what insurance fraud is. This is where an individual employs deception when making an insurance claim for financial gain. Insurance fraud and false claims can be made by anyone too, including those who work inside the insurance industry itself. Most times, however, it is committed by a singular individual
There are basically three types of insurance fraud:
● false statements made on a policy application or renewal in order to receive insurance coverage
● false statements made on a claim form in order to qualify for reimbursement, such as inflating the value of items that have been lost or destroyed or staging a loss in order to make a claim
● offering/accepting a bribe in connection with a false claim
Most insurance is governed by state law, but in the case of insurance fraud, federal prosecution can be possible, depending on the circumstances. In the event of health care fraud, the Federal Bureau of Investigations is the primary agency for investigating these cases.
As stated before, insurance fraud claims can be made by the employees of the insurance industry themselves; these employees have committed a federal crime and will face federal prosecution. The crime itself involves anyone who is an officer, director, agent, or employee of an insurance company who embezzles, steals, or otherwise misappropriates any money or other property of the insurance company.
This kind of punishment usually receives a maximum of ten years in federal prison, but it can be increased to fifteen years if that person’s conduct put the viability of the insurance company at risk.
What Must Be Proved In A Claim of Insurance Fraud?
For a person to be found guilty of insurance fraud, it must be proved beyond a reasonable doubt that:
● The accused knowingly made a false or misleading statement with the intent to deceive
● The false statement was made in connection with an application, claim, or payment, and
● The false statement had an impact on the outcome of the application or claim
False statements do not include facts that are irrelevant to the case, such as the wrong model number on a broken appliance, for example. They must be material to the claim, such as the true value of a broken appliance.
As for what the consequences of insurance fraud are, they are entirely depending on what the false claim amount is. It can incur punishments that include fines, imprisonment, or both.
For example, a false claim amount of less than $500 can incur up to ninety days in jail and/or up to a $1,000 fine; a false claim amount of more than $35,000 can incur up to twenty years in prison and/or up to $100,000 in fines.
What Are The Most Common Types of Insurance Fraud?
Because there are many different kinds of insurance, there are many different forms of insurance fraud in turn. Some of the most common types of insurance fraud include:
● workers’ compensation insurance claims for an injury that did not occur at work or as a result of work
● taking a life insurance policy out in someone else’s name
● failing to report a pre-existing medical condition in order to get lower life insurance or health insurance premiums
● changing the VIN number on a car to hide the fact that it was stolen or salvaged
Insurance fraud is first detected by the insurance company itself after they’ve performed their own investigation. They may want to handle the problem internally by denying the claim or application, leaving the client with no recourse. On the other hand, there is the other option of reporting the case to law enforcement.
This, in turn, will bring the case to court where the insurance defense attorney will step in to deal with the matter. The attorney will conduct their own investigation, in turn, to determine the validity of the insurance company’s claim of fraud and act accordingly.
One key piece of information that insurance fraud attorneys look to is what kinds of claims were filed by the policyholder beforehand, as well as the number of filed claims. There are antifraud databases that can provide information on what was claimed, the nature of the loss, mechanisms of injuries, et cetera.
Working With Policy Holders
Insurance defense attorneys can also work on the side of the policyholders themselves as well, not just the insurance companies. For example, if a policyholder is sued, such as in the case of a car accident, then an insurance defense attorney would step in to represent the policyholder in the case. When this happens, then the policyholder can be expected to pay less towards damages or even negotiate more favorable settlement terms for all parties involved.
In turn, this can help the insurance company in turn; they won’t have to pay out as much (or at all), especially if the fault in the other party can be proved. This can, then, benefit the policyholder because their premiums won’t go up as a result since they weren’t at fault. Having an insurance defense attorney is best for everyone involved and can make any claim event move forward more smoothly and expeditiously.
The role of an insurance defense attorney basically covers all parties who are involved with any insurance policy to ensure that all of the terms are being adhered to as well as that all government regulations have been met. That means that they have to wear a lot of hats to get the job done and ensure that everyone involved is happy with the smooth operation of the policy. Their goal is to ensure that everyone involved in an insurance policy contract has their legal rights protected.