Question

What could the advantages and disadvantages for an insurance company of small claims court? How could the insurer avoid the small claims court?

Answer 1

ADVANTAGES OF SMALL COURT FOR INSURANCE COMPANY

* Small claims court is inexpensive. The filing fee is much lower than in regular civil court, and you don’t have to pay a process server to serve the complaint.

* It’s also quick. You get a hearing soon after you file your small claim, and your case will be decided either immediately after the hearing or within a few weeks. No waiting months or years just to get before a judge.

*   You don’t need a lawyer in small claims court.  The process is designed to make it easy for people to represent themselves. In fact, some states say you can’t have a lawyer in small claims court.

* Small claims hearings are informal: no arcane legal procedures and evidentiary technicalities. Of course, you will still be required to prove your casewith contracts, invoices, witnesses, pictures of damages, etc.

* You may have a choice of where to bring your small claim. You may, for instance, be able to file your complaint in the court where you live or have a place of business, or where the defendant (the person you are suing) lives or has a place of business. You can call the clerk’s office in these courts to figure out where your claim is likely to be heard soonest.

DISADVANTAGES-

* On the downside, there are some special rules about suing a corporation. You must make sure you have the exact corporate name on the complaint, and that you send a copy of the complaint to the right corporate address. This can be tricky with companies that have franchises and with huge multinational corporations. The Corporations Division of your state Secretary of State’s office can assist you in obtaining the correct information.

* The amount of damages you can be awarded is limited by the jurisdictional amount.

Anytime you take someone to court, there is a chance that you will be counter-sued. You can be counter-sued in small claims court.

* Appealing your case if you lose may be difficult or impossible. But if the defendant loses, he or she may have a far easier time filing an appeal. If you are worried about giving up the right to appeal, check your local rules–small claims court may not be for you.

* You won’t be able to collect your money right away, unless the defendant agrees to pay up on the spot. Once the small claims judge or magistrate rules in your favor, you still have to get a writ of execution to get your money (unless, of course, you and the other side agree on a payment plan).

The insurer could avoid the small courts by any of the following -

1. Denial: Denying claims is one of the easiest and fastest ways for insurance companies to boost their bottom line. The practice of “just say no” to claims is seemingly ingrained in some insurance companies’ culture.

2. Discriminate by credit score: Few people realize that your credit score affects your insurability, what you pay for insurance premiums and can even prevent you from obtaining insurance altogether.

3. Delay and obstruct claims until the claimant gives up or dies: For many policyholders who purchased long-term care insurance, getting the insurance company to pay has been a nightmare. Customers report having to call insurance companies multiple times and resending documents multiple times. Companies then say that you filed your claim too late and will deny the claim, knowing that the policyholder will either give up and go away or is old and frail and will die soon.

4. Retroactively cancel policies:Obamacare effectively prevents insurance companies from denying coverage based on preexisting conditions. Now, some insurance scour coverage applications and medical records to find insignificant inconsistencies, claiming application fraud and then cancelling coverage.

5. Cancel policyholders for simply making a call about a claim: Learning that making a call about a claim might put them in a worse situation surprises most policyholders. If you have a claim for property damage, but decide to pay for the damage yourself, the insurance company may treat your inquiry as a claim and try to cancel your coverage.