What You Should Know About Insurance Providers

Insurance Providers

Insurance providers spend tons of money, in the millions if not more, on advertising their products and how they will come to your aid when disaster strikes.

This type of promotion aims for one thing: that you buy an insurance policy from them. But when disaster does strike, do the providers provide or will the disaster continue?

There are many types of insurance policies, and some companies will cater to a specific type of insurance policy. 

Health insurance providers will cover medical costs, life insurance providers pay human capital value or offer legacy planning including how to choose a life insurance beneficiary, while car and homeowners insurance providers will be focused on liabilities and replacing or repairing property and valuables.

These corporations may have outside investors as stockholders or may be structured as mutual companies where the policyholders own the company.

Insurance Companies Exist to Make a Profit

You pay insurance premiums, usually every month. Should you forget, your provider will send you a reminder. If you miss an online invoice payment or several, your provider will cancel your policy unilaterally. 

To make a profit, insurance providers try to pay a smaller amount to claims filed than what they receive in premium payments. The fewer claims they pay and the more premiums they cash in, the more profit they realize. Insurance providers control their risks as a company and consequently their earnings to some extent.

Insurance Adjusters Work for Insurance Providers

An insurance adjuster is a person who determines how much should be paid out for a claim you file and when it should be paid. These employees are not the same ones that sell the insurance policies. Like all good employees, their loyalty is to their employer and not to the client.

An Insurance Policy is a Written Contract

Your insurance policy is nothing more than a contract between you and the insurance company. This contract stipulates what is covered and what is not covered under the contract you sign. Read your insurance contract carefully to understand the conditions of your insurance coverage and any limits of that coverage. Keep a copy handy.

Claims Settlements are Definite

If you have filed a personal injury claim, the settlement awarded will be final. Should other symptoms appear that require further medical treatment, know that a vast majority of judgments include what is known as a “global release”. 

This frees the party responsible for the accident or damage as well as the insurance provider from any future liabilities connected to the injury or damage-causing incident. Once a settlement is determined, there can be no further additional payments. 

Very rarely, there may be an exception to this where a settlement can be set aside, but this is close to impossible to accomplish.

Insurance Providers Have No Obligation to be Truthful During Settlement Negotiations

Insurance providers may tell injured parties or those who have suffered damages that their claims are worth much less than the true value might be. They also tell victims that they will not be receiving a better offer even with legal representation to convince them that their claim is worth less than it is. 

These tactics are considered legitimate during negotiations and utilized in the hopes of getting victims to settle for less, especially when involved in settlement talks without a lawyer present.

Insurance Providers will Pay a Settlement and not the Person Being Sued

If you are involved in a car accident and you file a claim, you will usually not be paid by the person at fault but by their insurance company. It’s no wonder that those with perfect driving histories benefit from lower auto insurance premiums, because the provider is footing the bill.

This is one of the reasons that many states require car insurance before a car may be driven on public roads so there is certainty that damages will be paid for. While the faulty party may be named on the claim, the insurance provider must pay damages to honor their contract with the insured within the limits stipulated in the contract.

Frivolous Insurance Claims Do Not Result in Large Settlements

Although the industry does make an effort to convince the public that frivolous claims cost providers million-dollar judgments, hence premiums must be increased, this is not the case. 

Lawyers, as officers of the court, are not permitted to file frivolous cases and judges can dismiss such claims before they ever arrive at trial. Furthermore, juries will usually not award damages in cases without merit.

Insurance providers often work directly with hospitals and medical care facilities so that their medical costs are considerably lower than what a hospital would normally bill an individual patient.

What You May Not Know

Insurance companies can legitimately use their clients’ money to make investments for their profit. Generally known as a “float”, insurance corporations will benefit from a positive cost of their capital as they do not expect repayment on their investment until after certain circumstances. There is less risk when investing and profits are generally more stable.

What’s Important to Know About Insurance Providers

Insurance companies are businesses that have profit as their final objective. They are not charities or non-profit entities. They do not pay insured claimants more than what is necessary for the event of a judgment being awarded

They also will determine the timeline for when they will pay you if your claim is awarded a settlement. An important concept to be aware of is that you should not trust the insurance provider per se, but what you have agreed to, signed for, and paid for in your policy/contract.