Understanding USAA Insurance Claims and Insurance Bad Faith

April 16, 2023 | Attorney, Matthew Dolman
Understanding USAA Insurance Claims and Insurance Bad Faith

We take out insurance policies to protect us from the financial liability that comes with causing an accident, facing the consequences of a weather-related disaster, or protecting us if we require medical care. Auto, homeowners, and health insurance are the most common types of insurance that nearly all of us have or have had during our adult life.

We pay monthly, quarterly, or annual premiums for these policies. When we file a claim, we expect it will be handled professionally, fairly, and promptly. Unfortunately, this is not always the case, particularly when dealing with United Services Automobile Association (USAA) Insurance.

The History and Current Status of USAA Insurance

Understanding USAA Insurance Claims and Insurance Bad Faith

Since 1922 USAA has focused on serving members of the U.S. military and their families. They provide a broad range of financial services, including multiple forms of insurance. Since the company’s origins, which started with a handful of military members, the company has grown to 13 million members served by more than 35,000 employees. The company recently reported $35.6 billion in annual revenue.

This is a substantial amount of money, and the company is recognized as a Fortune 500 company because of this income level. However, make no mistake; part of this income comes from collecting insurance premiums from their members. The income would be lower if they paid out more claims in good faith and up to the amount claimants require.

USAA and Insurance Claim Denials

As previously stated, we obtain insurance to protect ourselves from financial ruin. We pay premiums to ensure that, should we need to file a claim, we can count on our insurer to protect our interests and make sure they pay that claim promptly.

However, insurance companies, including USAA, are in the business of making money. They have shareholders and stakeholders who benefit from their delaying or denying the payment of claims. The lower the amount the company pays in claims, the better for its bottom line. This is where insurance adjusters come into the equation.

Insurance adjusters have one primary job: to investigate every claim and make sure the company can pay as little as possible for the claim. This means they are often at odds with the person who has filed the claim, whether the person is a car accident victim, a homeowner who has faced a devastating loss in a weather-related incident, or a family who has lost a loved one and is attempting to collect on a life insurance policy.

When an insurance company is not upholding its end of a contract, the client, or a victim with a claim, has the right to file a bad faith insurance claim. However, this step should be taken with the guidance of a skilled attorney with experience handling these types of claims, as they can be very complicated.

Steps Insurance Adjusters Use to Deny or Delay Claims

Insurance policyholders have a right to a fair and timely claims process. Insurance companies have a duty to act in good faith. However, there are several steps an adjuster may take to stall or deny a claim. Some of these include:

Minimizing the Value of a Claim

One of the most commonly used tactics is minimizing the value of a claim. Let’s assume a car accident victim suffers a serious injury that requires multiple follow-up doctor’s visits, weeks out of work, and a surgical procedure to help them recover from an accident injury.

While all accident evidence may point to a USAA policyholder being responsible for the accident, USAA may still find ways to minimize the amount of the claim they are paying.

They do this by:

  • Demanding prior medical records. by demanding the victim supply prior medical records, the insurer may find a pre-existing condition that may have been exacerbated by an accident but existed before the accident. They may try to blame injuries on the pre-existing condition to avoid paying a claim.
  • Attempting to victim blame. USAA may claim that their insured was not entirely at fault for the accident. While there may be ironclad proof of the opposite, it will not prevent the insurer from pursuing this tactic to avoid liability.

Finding Policy Exclusions to Deny Claims

When a homeowner files a claim because their home was damaged in a flood, fire, or another occurrence, USAA may attempt to use policy exclusions. They will scour every part of the policy to see if any language may allow them to either minimize the claim or avoid paying it completely.

One clause a policyholder may overlook is an act of God clause, more commonly known as force majeure. The company often claims that because the event that caused the damage could not have been prevented, the homeowner  cannot hold them liable for the damages.

Another potential way that claims are denied under USAA policies includes the policyholder providing inaccurate information. For example, the insurer may point to a change in the home, which resulted in the property being more susceptible to damage than the original structure when the policy was issued. USAA may also deny the claim based on a failure to disclose a pre-existing condition. Life insurance claims, medical claims, and wrongful death claims may also be denied on this basis.

Investigations and Challenges of Losses

Insurance company adjusters understand that there is a limit to how much financial pain a person may tolerate when waiting for an insurance settlement. This fact provides them with some leverage in the claims process. 

To use this leverage, the adjuster may:

  • Slow investigations. Insurance companies have the right, and an obligation, to investigate claims for their legitimacy. However, the longer it takes to investigate a claim, the more harm a potential victim faces. These investigations may also result in the claimant being asked to submit additional documentation, which can ultimately delay a claim even further.
  • Unusual document demands. Burying a claimant with paper demands is another common way an adjuster will use to challenge a loss. In nearly all situations, an insurer will insist that a claim be accompanied by certain documents, which is normal. However, there are instances where documentation demands are accompanied by submission deadlines that may be difficult or impossible for the claimant to meet. This can result in further delays or an unfair denial of a claim.

If someone faces unnecessary delays after filing an insurance claim, they should contact an attorney with experience dealing with bad-faith insurance claims. In some instances, having an attorney who serves as an advocate from the start of the claims process can prevent many of these issues.

These are only a few options that an insurer may use to obstruct the payment of a legitimate claim filed with their company.

USAA attempted to stall a legitimate claim when Stephanie Hobbs, a car accident victim, filed a demand for reimbursement up to the policy limit of their insured.

Ms. Hobbs successfully argued that this was done in bad faith, and the court agreed. While we do not know the outcome of this case, we do know that filing a bad faith insurance claim can help hold an insurer, even one the size of USAA, accountable for their improper actions.

What is a Bad Faith Insurance Claim?

Policyholders and victims who have filed an insurance claim should be aware of the difference between normal tactics insurers use to delay or reduce claims and bad faith. While using tactics is typically legal, there is also a point where an insurance company may cross the line between negotiating in good faith (even for less than a claim may be worth) and acting unreasonably. When an insurer acts unreasonably, it may be worth considering filing a bad-faith insurance claim.

Examples of bad faith may include:

  • Unreasonable delays. an insurance company normally has a specific period to respond to a claim. For example, in Florida, an insurer has only seven days to acknowledge receipt of a claim. Their failure to do so could qualify for a bad faith claim.
  • Denying claims without just cause. an insurer may deny a claim outright if they believe the claim is not legitimate or if there is reason to believe the claim is flawed. However, they must include the reasons for denial with the denial letter. Failing to have a reasonable basis for a denial could be considered bad faith.
  • Failing to investigate the claim promptly. insurers have a right to investigate claims, but they cannot wait weeks or months to do so without such a delay being viewed as bad faith.

When a claimant seeks legal advice from a bad faith insurance lawyer, the attorney will seek proof that the insurer has acted with intention, has acted in a manner considered negligent, or underestimates damages to the point where it is clear they are acting in bad faith. In many cases, an insurer may walk the line of bad faith without ever crossing it, but there are instances where they do cross that line and an attorney can help distinguish the difference.

How To Prevent USAA From Acting in Bad Faith

Victims of accidents and homeowners facing financial ruin because of damage to their homes often feel helpless in dealing with the uncertainty of filing an insurance claim. There are some ways in which this can be prevented. The first thing anyone with an insurance claim should do is contact an attorney with experience dealing with similar claims. This is important because the right lawyer can review everything a person has assembled to back up their claim, advise them of their legal rights, and tell them what options are open.

Working with an attorney from the outset of the claims process offers other benefits as well, including:

  • Insurers know you mean business. Let’s face it, no one gets an attorney involved unless they are serious about pursuing it to the fullest extent of the law. Insurers who see that a policyholder or accident victim has hired an attorney will take the claim seriously.
  • Advise regarding rights and options. an attorney will provide the information a claimant needs to understand their rights and options under the law fully. Lawyers who handle claims have a full understanding of civil law and will be able to advise a claimant accordingly.
  • Investigating claims. an attorney can conduct an independent investigation to bolster their client’s claim and collect difficult to obtain evidence. This is not always the case when a person handles their insurance claim alone.
  • Document requirements. Lawyers who handle civil law understand what documentation is needed when submitting a claim. The more thorough a claim is when submitted, the less likely the insurer is to stall processing the claim.
  • Handling negotiations. Most of us have never had seriously negotiate with an insurer. Insurers use every legal means to undervalue claims. However, when an attorney is involved, their primary goal will be to do everything possible to get their client the maximum possible settlement for their losses.
  • Filing lawsuits. When negotiations fail to produce acceptable results, an attorney can file a lawsuit on behalf of their client. While this is not typically the preferred outcome, it may become necessary to ensure fair compensation.

Insurers lose money when they pay claims, so USAA Insurance will take all the legal steps to reduce or deny a settlement. However, when someone has paid their premiums and filed a claim in good faith, they expect to be treated fairly.
When USAA Insurance claims go wrong, a bad faith insurance lawsuit may be the best option for a policyholder or victim to get the compensation they deserve for their losses. Contact a lawyer experienced in bad faith claims, as they can be an invaluable advocate and partner.

Schedule A Free Consultation

 

Matthew Dolman

Personal Injury Lawyer

This article was written and reviewed by Matthew Dolman. Matt has been a practicing civil trial, personal injury, products liability, and mass tort lawyer since 2004. He has represented over 11,000 injury victims and has served as lead counsel in over 1000 lawsuits. Matt is a lifetime member of the Million Dollar Advocates Forum and Multi-Million Dollar Advocates Forum for resolving individual cases in excess of $1 million and $2 million, respectively. He has also been selected by his colleagues as a Florida Superlawyer and as a member of Florida’s Legal Elite on multiple occasions. Further, Matt has been quoted in the media numerous times and is a sought-after speaker on a variety of legal issues and topics.

Learn More