Interest On Delayed Auto Insurance Claims

In most cases, insurance companies are required to handle auto insurance claims promptly. However, there are instances where delays occur, and this can be incredibly frustrating for the claimant. While it is rare for insurance policies to include a clause that allows for the charging of interest on delayed claims, there are steps that can be taken to address this issue. If an insurance company has delayed processing your claim, you can lodge a complaint with the relevant authority, such as the Insurance Complaints Bureau (ICB) or the Australian Financial Complaints Authority (AFCA). Additionally, some states have specific laws regarding the timeframe in which insurance companies must settle claims. For example, in California, insurers have 40 days to accept or reject a claim, while in Texas, they have 30 days. It is important to note that the average time for an insurance company to pay a claim is about 30 days, and the complexity of the claim can also impact the processing time.

Claimants can request an advance payment if they are in urgent financial need

When faced with an insurance claim delay, claimants can request an advance payment if they are in urgent financial need. This is applicable to general insurance claims, such as motor vehicle insurance, and is particularly relevant when the delay is unreasonable or due to the insurer's fault. While the specific process may vary based on location and insurance type, here are some steps that claimants can take:

• Communicate with the Insurer: Contact the insurer to express your urgent financial need and request an advance payment or a fast-tracked claim. It is important to provide any necessary documentation or information to support your request.
• Understand the Timeframes: Be aware of the expected timeframes for the insurance claim process. For example, in some cases, insurers are expected to decide on accepting or rejecting a claim within a specified number of business days. Knowing these timeframes can help you identify unreasonable delays.
• Complain to the Insurer: If your request for an advance payment is denied or there are continued delays, you can lodge a complaint with the insurer's complaints department or internal dispute resolution team. Clearly communicate any financial hardship, language barriers, or other relevant issues that are contributing to the urgency.
• Seek External Assistance: If the insurer's complaints department is unresponsive or unable to provide a satisfactory resolution, you can seek help from external organizations. For example, in Australia, claimants can reach out to the Australian Financial Complaints Authority (AFCA) for free and independent assistance.
• Request Interest on Delayed Claims: In some cases, you may be able to request interest to be added to your claim if the insurer has unreasonably delayed the payment. This interest accrues from the date the insurer receives notice of the claim.
• Explore Other Options: Depending on your location and circumstances, there may be alternative options for financial assistance. For instance, you could explore government-provided hardship advance payments, urgent payments, or budgeting loans. Additionally, local councils and charities may offer financial support or grants to those in need.

It is important to carefully review your insurance policy, as well as local laws and regulations, to understand your rights and options when dealing with insurance claim delays and advance payments.

Interest rates owed by insurance companies are set by the Chief Financial Officer

In Florida, the interest rates owed by insurance companies for delayed claims are set by the Chief Financial Officer and adjusted quarterly to account for economic and insurance changes. This interest rate is the same as the rate applied to unpaid judgments and is currently set at 6.57%.

The interest is calculated from the date the insurer receives notice of the claim and is payable when the claim is paid. This incentivizes insurance companies to pay claims within three months to avoid paying interest.

While it is rare for insurance policies to include a clause providing for the payment of interest in the event of a delayed claim, undue or improper delays may be grounds for lodging a complaint with the relevant authority, such as the Insurance Complaints Bureau (ICB) or the Australian Financial Complaints Authority (AFCA).

If you believe your insurer has treated you unfairly or has unreasonably delayed your claim, you may be able to receive compensation in the form of interest on your claim.

Claimants can request a review of their claim up to 12 months after it is finalised

In the event of an insurance claim delay, claimants can request a review of their claim up to 12 months after it is finalised. This applies to general insurance claims, including home and contents, motor vehicle, sickness and accident, travel, pet, and consumer credit policies. It's important to note that this doesn't apply to life or health insurance.

If there are unreasonable delays in processing your claim, even within the specified timeframes, you have the right to complain. You can first lodge a complaint with your insurance company's complaints department, and if that doesn't yield a satisfactory resolution, you can escalate the matter to an external body, such as the Australian Financial Complaints Authority (AFCA) or The Insurance Complaints Bureau (ICB). These organisations can assist in seeking interest for the delay or other forms of compensation.

It's worth noting that insurance policies rarely include clauses that explicitly provide for the payment of interest in the event of a delayed claim. However, if there is an express term in your policy that stipulates this, you may have a contractual right to claim interest. Additionally, if you can demonstrate that the insurance company engaged in undue or improper delay tactics, you may have grounds for a complaint and the potential recovery of interest.

If you believe your insurer has treated you unfairly, you may be able to seek compensation. This could include requesting interest to be added to your claim if the insurer has unreasonably delayed the process. It is advisable to seek legal advice regarding your specific situation and rights.

Claimants can take matters into their own hands by reaching out to the adjuster overseeing their claim

Claimants can benefit from understanding the role of a claims adjuster and how they can interact with them during the claims process. Claims adjusters work for the insurance company and are responsible for overseeing every aspect of the claims process. They investigate claims by interviewing claimants and witnesses, reviewing records, and inspecting properties. This investigation allows them to determine the insurance company's liability and calculate a fair settlement amount.

By understanding the role of the claims adjuster, claimants can provide the necessary information and documentation to support their claim. It is important for claimants to know that claims adjusters do not work for them but for the insurance company. Therefore, claimants have the option to hire their own independent claims adjuster, who will work to protect their interests and ensure they receive a fair outcome.

When dealing with a claims adjuster, claimants should provide detailed descriptions of their losses, create inventories or records of damaged items, and obtain their own estimates for repairs. This information will assist the claims adjuster in their assessment and help move the claims process forward.

Additionally, claimants should be aware of the timeframes within which their claim should be processed. In some jurisdictions, there are regulations and guidelines that dictate how long an insurance adjuster has to respond to a claim. If claimants feel that their claim is being unreasonably delayed, they can take action by lodging a complaint with the insurance company's complaints department or seeking help from external organizations, such as the Australian Financial Complaints Authority (AFCA) or The Insurance Complaints Bureau (ICB).

Claimants can sue their insurance company for taking too long to resolve a claim

In most cases, claimants can sue their insurance company for taking too long to resolve a claim. However, the specifics of the situation, as well as state or national laws, will determine whether the claimant has a case.

In the US, state laws vary, but insurance companies generally have a set number of days to respond to a claim. For example, in Texas, insurance companies have 35 business days to settle a claim once it has been filed. In Illinois, companies have 15 days to respond to a claim and give instructions, and then 30 days to pay the full amount once it has been approved. Despite these laws, insurance companies have a history of sitting on claims and not responding.

If an insurance company is taking too long to respond or pay out a claim, the claimant may have the right to sue. In some cases, hiring an attorney to remind the company of its obligations under state law is enough to get the insurer to take the claim seriously. However, there are legitimate reasons for an insurance company to delay processing a claim, and claimants should be aware of these before taking legal action.

If an insurance company unreasonably delays a claim, the claimant may have grounds to file a bad faith lawsuit. This means that the insurance company has acted in bad faith by putting off handling the claim without a valid reason. Common violations that constitute bad faith include wrongful claim denial, untimely and incomplete claim processes, untimely payment to the claimant, and inadequate payments.

To determine whether an insurance company is taking too long to resolve a claim, claimants should understand the insurance claim process and gather as much evidence as possible to support their claim. This includes gathering witness information, photos, videos, and detailed notes regarding the events leading up to the incident. Claimants should also keep records of all correspondence with the insurance company and its representatives.

In addition to suing for taking too long to resolve a claim, claimants may also have legal grounds to sue their insurance company for other reasons, such as violating their duty of care, violating their contract, wrongly denying their claim, or failing to adequately investigate their claim.

Frequently asked questions