May 11, 2016

Wisconsin Insurance Laws to Protect Policyholders

Policy Protection Laws in Wisconsin: What Insurance Companies Can and Can’t Do to Make a Buck

No matter what type of insurance company you’re dealing with—health, car, homeowner, etc.—they’re all out to make a profit. Although they may convince you that they have your well being in mind, the fact of the matter is that they can’t exist if they don’t make a profit. And where do their profits come from? You.Often enough, insurance companies will act like your best friend as long as you keep paying for coverage. As soon as you stop being profitable and actually need compensation, they’ll suddenly become your worst nightmare.

Insurers Knock You Down and Rummage Through Your Pockets… Almost

Insurers are geniuses at bending the rules, manipulating facts, and cleverly misinterpreting contracts in order to deny claims. However, when you purchase an insurance policy you enter into a contract that states that you’ll pay to ensure coverage as long as the insurer will actually cover damages when and if needed. Why doesn’t this contract limit insurer denials?

Unfortunately, because the majority of policyholders aren’t familiar with insurance laws, companies still get away with manipulation to lure in new policyholders, to terminate claims unjustly, and pay out lowball settlements—even though laws are in place precisely to prevent such abuses.

This is why it is extremely important not only to know what insurance companies can and can’t do with your claim, but also to know whom to turn to when your insurer attempts to take advantage of your insurance law inexperience.

Keeping Insurers Honest: Wisconsin Insurance Laws Limit Foul Play

Every state has various insurance laws which regulate how insurance companies can (and can’t) deal with policyholders and claim settlements. The Wisconsin statutes have a specific section on insurance marketing which provides guidelines and definitions of unfair practices. If your insurance company commits any of these acts, by law you’re entitled to sue for breech of contract.

The three laws most often bent are these:

  • Misrepresentation. Insurers are forbidden to intentionally give false information or misinterpretations of contracts to policyholders or potential policyholders; this includes false or misleading information, information that is misleading because of incompleteness, reports filed with intent to deceive a person examining it, and making a false entry in a record (or willfully failing to make a proper entry).
  • Improper inducements. These are bribes. Insurers must refrain from seeking to encourage potential policyholders into entering into an insurance contract (or terminating an existing insurance contract) by offering benefits not directly specified in the new policy. In addition, insurers cannot make any agreement or promise that is not clearly expressed in the policy to be issued.
  • Unfair discrimination. Insurers may not discriminate among policyholders by charging different premiums or by offering different terms of coverage unless the policy is included within a group or franchise. Rates are not considered unfairly discriminatory if they are averaged broadly among persons insured under a group, blanket or franchise policy. In addition, coverage cannot be determined by physical or mental disabilities, and conditions of the policy can’t change due to physical or mental changes of the policyholder.

At GCW, our experienced insurance lawyers take on our clients’ burdens and we work to alleviate the pressure brought on by insurance company bad faith and misconduct. Contact us if you have questions. We can help.

Faith or Con Game? You Decide

Given the potential manipulation of clients as well as the ease in which an insurer can deny your claim, do you think insurance companies should be monitored more closely by the Better Business Bureau? Should there be some way to guarantee proper settlements before purchasing a policy, instead of relying on good faith? What is your opinion about underhanded insurance tactics? Do you have firsthand experience of an insurer taking advantage of contractual obligations?

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