Demand Letter Question... Continued?

Question

I just asked the following question: What happens when an attorney sends a demand letter to the insurance company threatening to sue for a denied claim (car theft)? Does it usually get ignored or does it get the insurance to finally do something?

The car is only worth $5K, is it likely that they would make a business decision to just pay the claim rather than to fight it in court and pay more for attorney's fees? Also, if the letter is sent, will they try to retaliate against me and cancel my policy? Thanks!

Answer 1

It will probably be drug out for a while.  Are you saying that your car was stolen and the insurance company won't pony up so you are suing them?  If so, I might shop for a new insurance company anyway, because if that is what happened that is pretty shady.  But for your question, an insurance company can choose to not renew your coverage at any time so they might decide to stop covering you or if they do indeed pay out to you, they could raise your rates.

Answer 2

it will take time for the insurance Co. to be sure it was stolen.and to be sure it wasn't  your fault like not locking the doors, being sure all the windows were up etc. I know it stinks BUT they will drag it out as long as possible and they may cancel your  policy saying you are a bad risk.

Answer 3

How they react depends on the carrier and why they denied the claim. Yes, a few carriers would roll over and pay the claim but if the denial was correct, I'd say most won't. They have to weight the message it sends vs the cost to defend. If they have a valid denial and they still pay claims it just means that it will end up costing them more money in the long run as they send the message that if a suit is filed, they will pay claims even if they are not owed.

They also know 99.99999% of the attorneys out there won't actually file the complaint/suit.