Insurance claims are filed every day, and while many lead to compensation, others do not. When a claim is denied, the policyholder may choose to sue the insurance company, or a victim will sometimes choose to file a lawsuit against the insured. Insurance defense serves to protect the interests of the party or parties that are being sued.
The Role of Insurance
People and businesses aiming to guard against financial losses may purchase insurance. The coverage is based on the terms and conditions of the insurance policy. The party that purchases the insurance is referred to as the insured or policyholder. Holders pay monthly, quarterly or annual premiums in order to ensure that if something happens to the insured asset, they will receive compensation.
Types of Insurance
There are several different types of insurance.
- Most people are familiar with auto insurance. It helps compensate for property damage, medical expenses and other losses incurred in car accidents.
- Homeowners insurance protects against things like floods, tornadoes and fires. It also provides compensation to homeowners if they are burglarized or to individuals if they are injured on the property.
- Businesses often have property insurance to guard against potential claims and lawsuits, such as those based upon premises liability.
- Health insurance provides payment for certain medical expenses.
- Life insurance provides monetary benefits to a named beneficiary if an insured dies.
There are many other types of insurance products, including malpractice insurance for lawyers, medical providers, accountants and other professionals. The benefit that is provided to the insured in case of a loss varies by the type of insurance policy and its terms and conditions.
An insured that incurs a loss covered by the policy will generally file a claim with the insurance company. An insurance adjuster is assigned to the claim to determine whether the loss is covered and whether any defenses apply.
When a claim is filed the insurance company is typically bound by the policy to retain a defense lawyer to represent the insured. Having a defense lawyer can also help protect the company's financial interests.
Some insurance claims may be deemed fraudulent. Insurance fraud is committed when the policyholder fakes an injury, exaggerates damages or causes an accident in order to receive compensation. An insurance adjuster who suspects insurance fraud may investigate the action and refer it to the appropriate authorities.
Claims Against Insurance Companies
When a claim is denied, the claimant may decide to pursue a bad faith lawsuit against the insurance company. A bad faith lawsuit alleges that the insurance company did not fulfill its contractual obligation in handling a claim. Insurance companies either use their own attorneys or retain private defense counsel when they are facing legal challenges of this nature.
Reasons to Hire an Insurance Defense Lawyer
There are several reasons why the assistance of an insurance defense lawyer may be necessary. When a policyholder is sued, the insurance company may retain a lawyer to represent the insured. If the insured is alleged to have caused a car accident, for example, the insurance company may retain a lawyer on the policyholder's behalf.
Insurance companies often retain insurance defense lawyers to represent their own business interests. This may occur if the insurance company is accused of wrongfully denying a claim. Insurance companies may also seek the advice and counsel of an insurance defense lawyer to ensure that their policies are compliant with applicable state laws and regulations.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.