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Flood Insurance

Low-Ball Claims Practices

Many victims suffering more than ten thousand dollars in damages report encountering significant delays and red tape when attempting to settle their claims.

Industry insiders describe these delays as low-balling and stonewalling tactics. In other words, first the victim encounters a low settlement offer. Insiders tell us that tactic is designed to lower the victim’s expectations. Next, the victim encounters an endless sea of delays – documents must be notarized, faxed, re-faxed, over and over. Weeks turn into months. In the end the victim gets worn down and feels they must move on with their life.

Not only have many victims reported the same treatment by numerous carriers, but text books have even been written on the subject for the insurance industry.

A chapter from one such reference book provides an in-depth discussion for industry executives from a risk-management perspective. Included are the pros and cons associated with these tactics.

To summarize, if the carrier uses the tactics, settlement amounts are likely to be reduced. On the other hand, the victim is more likely to become a “P”. The book describes a “P” as a plaintiff. In other words, if the victim is low-balled and stonewalled, the carrier is likely to reduce its settlement losses at the risk of some victims filing suit.

From a numbers perspective, it works for the carriers. Most victims subjected to these tactics just take what they are offered and make up the difference out of their own pockets.

Last Modified: 090504 2031


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