San Francisco Insurance Law Blog

Disability insurance program funding and process

People in California who have developed medical conditions or injuries that preclude them from working may be able to apply for disability benefits to help them provide for themselves and their families. While many people might assume that the Social Security Disability program can provide everything they need. However, that may not always be possible. This makes it important for people to carry their own, separate long-term disability insurance policy.

As explained by the FGA, the government-run disability program through the Social Security Administration has been plagued with problems for some time. One of the biggest problems has been a dramatic increase in the number of people applying for these benefits.

Examples of bad faith by insurance companies

Most people in California have at least one type of insurance policy in their name but it is not uncommon to hold multiple insurance policies. These might include some combination of automotive insurance, homeowner's insurance, renter's insurance, health insurance, life insurance and disability insurance. Regardless of the type of policy and what it is designed to cover, it is reasonable for you to expect that the insurance company will appropriately protect and compensate you when you have a legitimate claim. Unfortunately, this does not always happen.

As explained by FindLaw, there can be instances where an insurance company might engage in dishonest practices or act in a manner that is not fair to the policy holder. These events are referred to as bad faith in the world of insurance.

The importance of long-term disability insurance

For many people in California, the thought of being disabled may seem like something that will never happen to them. However, even a person who today is able-bodied and in excellent health can experience an accident that changes their life forever. The possibility of an unforeseen medical diagnosis also always exists. It is for these reasons that being properly insured is important.

The Social Security Administration estimates that 25% of people who are only 20 years old now will experience a disability lasting at least three months by the time they reach the age of 67. NerdWallet adds that people should consider their ability to earn a living their primary and most important asset instead of things like investment accounts or homes. Protecting that ability to earn a living is what disability insurance is about.

Civil ERISA violations

If you are like a lot of people in California, you have a retirement fund that is governed by the Employee Retirement Income Security Act. Since it was first enacted in 1974, this act has provided protection for countless employees by outlining the responsibilities of retirement plan administrators and sponsors. These responsibilities include communication with participants as well as protection of assets. The law also identifies activities that may be deemed as civil violations.

According to the U.S Department of Labor, any retaliatory action taken against a person who has exercised their rights under ERISA is a violation that may lead to enforcement actions. The failure to properly assess assets as the current fair market value is another potential violation. Plan administrators and sponsors are required to act in the best interest of the participants and the failure do to so is a violation. As such, any use of plan assets to benefit a party other than a participant, such as a sponsor or administrator, may be a violation.

What can I do about a denied insurance claim?

When making a homeowners' insurance claim, you trust the company you work with will find a satisfactory resolution to your problem. However, this is not always the case. Insurance claims are often denied, or pay out less than you're expecting. Nerdwallet explains some of the steps you can take to dispute a denied insurance claim. 

Insurance policies are often confusing and filled with jargon that a layperson might have a hard time understanding. That's why your first step should be to review your policy in detail to determine whether your claim is indeed covered. This will give you a better understanding of the denial and whether it was warranted. Don't immediately assume that the insurance company is correct. Insurance companies often make mistakes, and these mistakes cost policyholders quite a bit of money.

Beware of disability claims coded as sick vs. injured

Insurance company bait-and-switch trick cuts off LTD benefits at age 65

Many professionals and high earners purchased long-term disability insurance decades ago. They were relieved that the LTD policy kicked in later when they had to stop working because of a disabling condition.

Supreme Court asked to weigh in on forum selection clauses

Among the many benefits offered to employees by companies in California is the ability to participate in a retirement plan such as a 401K. These are often governed by the Employee Retirement Income Security Act. What many employees may not be aware of is that if they ever disagree with the benefits they are to receive under an ERISA plan, their employer might be able to dictate the court that would have jurisdiction over the matter with no regard whatsoever to the where the employee works or lives.

As explained by Bloomberg Law, a provision called the forum selection clause allows companies to identify the court of their choosing when addressing benefits disputes with employees. This is something that the United States Department of Labor does not believe is fair and that should change. Some people have tried to change this already. However, to date, at least four different federal appeals courts have essentially upheld an employer's right to choose the court for any benefit dispute. These are the Third, Sixth, Seventh and Eighth Circuit appeals courts.

Another Landmark Victory Against Travelers Insurance

State court ruled CGL policy exclusion was too ambiguous to enforce

The law firm of Pillsbury & Coleman LLP prevailed again in ongoing litigation against Traveler’s Insurance on behalf of a commercial policyholder. A California state court ruling, the first of its kind, declared that Travelers could not rely on a vague policy exclusion to shirk its duty to defend its insured.

Are PTSD triggers real?

Insurance companies in California may be more reluctant to pay long-term disability benefits to individuals whose symptoms are not measurable and quantifiable. If you suffer from post-traumatic stress disorder, you may have difficulty convincing an insurance company that certain conditions trigger your symptoms. Adjusters and others who work for the insurance company may accuse you of malingering, that is, faking your symptoms to receive benefits. 

Nevertheless, according to Web MD, the relationship between triggers and PTSD symptoms is very real. Because many triggers are objectively harmless things, insurance companies may be reluctant to recognize that they provoke your symptoms. However, it is not the inherent danger that the triggers themselves present that instigates the response. Rather it is their association with the traumatic event that has formed in your mind, often without your realizing it. 

Do you have a bad faith claim on your hands?

Californian residents like you rely on your insurance for vital, every-day things. This can include medical procedures, medication, routine doctor visits, and other things that your life and well-being rely on. When insurance companies refuse to honor their policies, it can be a huge blow.

Not all states have the same requirements for something to be considered bad faith. As FindLaw shows, conduct without proper cause - or with unreasonable cause - can be considered bad faith behavior in some. Other states have a more specific definition that can make it hard for you to get compensated if your claim is considered to be "relatively debatable". However, there are two common elements that must be present in all bad faith cases.

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