Post Claim Underwriting

One way that insurance companies try to avoid paying claims is by reevaluating your policy after you make a claim. In other words, insurance companies take a second look at how and why your policy was issued in the first place with the assumption that since you are in need of benefits, the insurance company obviously miscalculated how much of a risk you would be, therefore, the policy should never have been issued. It then cancels/rescinds the policy and returns the premiums that you have paid. This is called "post claim underwriting" - when the insurance company does its risk calculation after you file a claim. Insurance companies who do this are seriously harming the public because they allow for people to falsely believe that they have insurance protection. Once the policy is issued, folks stop seeking additional insurance coverage and after they need benefits, it is generally too late for them to get any other type of coverage. In other words, they are hung out to dry.

Insurance companies have all the information they need before they issue the policy to avoid this from happening to people. When you apply for insurance, you have to fill out an application and disclose all sorts of information about yourself to the insurance company, like your age, your health history, etc. Based on this information, the insurance company decides if it is going to make you an offer of insurance and on what terms and for what premium. An insurance company is generally not required to issue you a policy. The insurance company can place "riders" on your policy which limit the benefits offered or it can decline to offer you any insurance at all if it feels that you pose too much of a risk. This determination should all be completed before your insurance policy is ever issued. If an insurance company believes that you may have pre-existing health conditions that make you a higher risk than average, then it must investigate those facts before it determines what type of insurance to offer.

Post claim underwriting is a practice employed by some insurance companies who wait until you file a claim before spending money to determine prior health conditions. Then, after you have a claim, they assert that no coverage exists. The insurance company performs this after-the-fact evaluation to rid itself of an insured individual it contends should never have received insurance coverage.

The typical post claim underwriting insurance company is fairly easy to recognize. If at the time of your application, your insurance company requested no medical exam, asked only if you were in "good health", only allowed for yes or no answers to health question or even asked no health questions at all, chances are that the insurance company practices post claim underwriting.

If you have already filed a claim, here are some clues as to whether or not your insurance company is engaging in this type of conduct. First, after you file a claim, the company will ask you to sign a release for your medical records or it will use a release obtained during the application process. However it gets them, the insurance company will now begin to review your medical records. Usually, a long delay occurs between the time you file your claim and the company's answer. That's because it is now doing the investigation it should have done when you applied for insurance coverage. It will then find some omission or inconsistency from what was shown on your original application and deny coverage on the basis of misrepresentation, concealment or fraud in your application. You will be advised that your policy is being rescinded, the premiums returned, and that there is no coverage for the claimed loss.