The Dynamics of Denial

By Mark Goldwich

We previously talked about the different phases of denials, but now we’re going to learn about the dynamics of denial itself, and how the insurance industry has turned it into a force to be reckoned with, a force that no individual policyholder without significant training can realistically expect to overcome.

The sad truth is, in far too many cases, the Powers That Be can categorize your loss in any way they see fit, and then deny all or part of your claim. And the Powers That Be are, in all likelihood, far better at this categorizing-and-denying dynamic than you are at challenging it. And they are better at categorizing-and-denying than you are at challenging them. .

A dynamic is, literally, something in motion - and that is exactly what you’re going to feel like you’re dealing with when you deal with this strategy: a moving target. You will have been under the impression that you were talking about one thing, and suddenly you’ll get word from on high that, all along, you were really talking about something else - something that the insurance company, by a remarkable coincidence, has no responsibility for.

One word for this process is “dynamic” – but another word, I think, might be “game.” And just like in Las Vegas, it’s a game that the House (in this case, your insurance company) will usually win.

• Does this categorize-and-deny game affect all socioeconomic groups equally?

No. In my opinion, lower-income policyholders are much more likely to be adversely affected by what insurance companies do in terms of denial. After just about any kind of disaster, there is a percentage of people in virtually any community whose claim will be denied by their insurers on the pretext that their home maintenance was poor. This group is almost always disproportionately poor, and disproportionately belonging to a minority group.

Image courtesy of wikimedia

In other words, there are certain neighborhoods in a community where a home may not have been painted for a while, and a door may not have been fixed that should have been fixed. In these homeowners’ policies, there are, almost always, innocent-sounding “maintenance” and “wear and tear” exclusions. It seems fair enough: the insurance company isn’t responsible for compensating for normal wear and tear; the homeowner has an obligation to maintain the property. Watch what happens, though. After a disaster or other claim, and after a nightmare of delay and bureaucratic runarounds, the homeowner finally meets with an adjuster.

Can you guess what happens next? The adjuster simply decides that he or she can’t (or won’t) separate the damage of the disaster from the normal wear and tear of a home that happens to be occupied by people who can’t afford a fulltime housekeeping and repair staff. Without a public adjuster, these people may have their claims denied in part or in full, on the grounds that they have failed to maintain their homes properly. Look at it again: “You didn’t paint for a while. That means you must not be covered for a hurricane, because your poor maintenance makes it impossible for me to say for sure that a hurricane caused this damage.”

With a public insurance adjuster working on their side, these policyholders are, in my experience, far more likely to receive a fair settlement from the insurance company … even if there is physical evidence that they could, in a perfect world, have maintained their homes a little better.

• Why do adjusters do this kind of thing? Are they really “out to get” homeowners and deny as many claims as possible?

It’s more complicated than that. There are a lot of reasons adjusters may end up denying some or all of your claim. Part of it, perhaps, is simple laziness. (In the example I just mentioned, the wear-and-tear and maintenance issue, an adjuster may spot a few home-repair problems and decide that it’s simply easier to deny the whole claim than to do the work necessary to distinguish water damage from overlooked carpentry projects.)

Other issues might be inexperience, a ridiculously overstacked schedule, or a subtle series of messages from the insurance company to whom they are reporting. Let me be clear: I believe that at the outset of their work with the insurance company, adjusters are told to pay every valid claim.

But that’s a message that might only get sent once or twice during the adjuster’s relationship with the insurer. Far more potent, over time, are the daily messages an adjuster receives.

Even assuming that adjusters are never told (directly) to deny valid claims, they are given little “raps on the knuckles,” little messages from upstairs: “You did this wrong, you did that wrong, you paid too much here, you overlapped there.” It only takes a few weeks for these messages to have the desired effect.

Adjusters, of course, do not want to continue to go through the process of getting their knuckles rapped. They start figuring out for themselves what the insurance company

really wants. And so, by the way, do the engineers, repair and restoration firms and other “experts” sent out by the insurance company to “help” you deal with your situation.

I’ll have more to say about these people in a later blog, but for now, let me just leave you with this hint: If the insurance company sent them, don’t expect them to have your best interests in mind, even if you are the one paying them.

• What else can I expect as an excuse for denial of all or part of my claim?

Plenty. The insurance company may “misread” a critical definition of a word within your policy.

Result: Denial. Or: The insurance company may declare that your going on vacation (or having some other reason for leaving the property for a period) invalidated your policy.

Result: Denial. Or: The insurance company may choose to fixate on a clause in your policy that’s designed to remove responsibility for coverage in situation X – and they may try to apply that clause to situation Y, which has only the remotest connection to situation X. Result: Denial. Unless you are working with a professional.

For instance, an insurance company once tried to deny coverage to one of my clients on the

Image courtesy of a1homeinsp.com

basis of a leak in the roof of the property. They had fixated on the word “leak” in the homeowner’s policy exclusion. As it happened, though, that kind of “leak” wasn’t what justified the exclusion used. The relevant section of the policy talked about a repeated leak in a shower area. The leak had to be located specifically in the area of the shower for the denial to stick - and that was not what had happened at all. But that didn’t stop the insurance company from selecting a very tiny portion of that exclusion to quote in support of their denial of coverage. Result: Denial if you’re not working with a professional; no denial if you are working with a professional.

These are the kinds of problems that can be overcome if you use a qualified public adjuster. All are very difficult to spot – and thus difficult to challenge – if you’re unfamiliar with the language of insurance policies or the dynamics of denial.

At the risk of being blunt, let me put this another way: The company knows what it’s doing. You don’t. .

You get the picture by now. It’s in your best interests to work with someone who knows as much about the dynamics of denial as the insurance company does! In the blog, we’ll look at the third major weapon in the insurance company’s arsenal – their remarkable skill at deflecting responsibility for actually paying you what you are owed.

Mark Goldwich is president of Gold Star Adjusters, a group of public insurance adjusters dedicated to helping citizens get the maximum settlement for any insurance claim.