A Publication of WTVP

Have you ever had a loss that was not your fault and wondered why you had to pay the deductible? Insurance companies understand that the customer does not consider it fair, but most policies state that a deductible is paid before the balance of the claim, regardless of who is at fault. When the loss is not the fault of the insured, and another party is legally liable, the company will pay the claim and then attempt to recover the amount of the loss, including the deductible, from the responsible party.

Subrogation by an insurer to the rights of its insured was designed to place ultimate responsibility for loss upon the wrongdoer—they can “step into your shoes” and go after the negligent party on your behalf. An insurer does not have a right of subrogation against its own insured for claims arising from the risk for which the insured was covered. An insurance company will deny coverage when a loss is due to an intentional act of an insured because the act was not accidental and because most policies exclude such acts. Subrogation will not be allowed in favor of a person guilty of fraud.

According to the Insurance Information Institute, it is estimated that fraud accounts for 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses, or about $30 billion a year. Fraud is defined as a deliberate deception perpetrated for unlawful gain; a trick or swindle. Insurance fraud can be “hard” or “soft.” Hard fraud occurs when someone deliberately fabricates claims or fakes an accident. Soft insurance fraud, also known as opportunistic fraud, occurs when normally honest people pad legitimate claims or intentionally understate the number of miles they drive each year or, in the case of business owners, list fewer employees or misrepresent the work they do to get a lower premium.

Ongoing studies by the Insurance Research Council show that significant numbers of Americans think it is alright to inflate their insurance claims to make up for all of the insurance premiums they have paid in previous years when they have had no claims. Before you think this is a good way to go, be aware that your insurance company has a Special Investigations Unit to fight insurance fraud and the State of Illinois has a criminal statute for persons who have defrauded—or who attempt to defraud—their insurance company by presenting a fictitious claim.

A better way to make money off your insurance company is to talk to your agent to make sure you are getting all the discounts available and think about the real payback from a life insurance policy. iBi