Why Do Insurance Companies Delay Paying Valid Claims?
Delays in insurance claim payments can cause frustration and financial hardship for both policyholders and third-party claimants. While these delays can stem from legitimate reasons, insurance companies often delay paying valid claims to protect their own interests.
Maximizing Profits
Insurance companies are, at their core, businesses aiming to maximize profits. One way they achieve this is by delaying claim payments. Insurers continue earning interest on those funds by holding onto the money owed for as long as possible, Even a few weeks of delay can make a significant difference, especially for large claims.
Hoping Policyholders Will Settle for Less
Insurance companies often delay claims in the hope that policyholders will settle for less than they are owed because they are overwhelmed by financial stress. The longer the insurer delays, the more desperate the policyholder becomes, increasing the likelihood that they will accept a lower payout just to end the process.
Creating Bureaucratic Obstacles
Another common delay tactic involves creating unnecessary bureaucratic hurdles for the claimant. Insurance companies may request redundant documentation, claim they need more information or perform overly long investigations. These tactics can make the claims process confusing and difficult, leading policyholders to feel frustrated and overwhelmed. By complicating the process, insurers hope some claimants will give up or fail to complete the necessary steps, allowing them to avoid paying the claim entirely.
Disputing Liability
Insurance companies sometimes delay paying valid claims by disputing liability, even in straightforward cases. If the insurer can successfully say that you or another party is partially at fault, it would reduce the amount the company has to pay.
Investigating for Fraud
While profit is the motivation for some delays, insurance companies also have a legitimate responsibility to investigate claims for fraud. If the insurer suspects dishonesty or inconsistencies in a claim, they may take extra time to review the details.
The Claim is Complex
When a claim involves large amounts of money or multiple parties, it is inherently more complicated. More investigation, documentation, and experts to evaluate damages are typically required.
Staffing Issues
When companies don’t have enough claims adjusters or customer service representatives, claims processing slows down. High volumes of claims or a lack of resources can cause genuine delays, even if the company isn’t intentionally trying to withhold payments.
How Delays Impact Policyholders
Delays in paying valid claims can have serious financial and emotional consequences for policyholders. After an accident, disaster, or medical emergency, people often rely on timely insurance payouts to cover urgent expenses, like medical bills, home repairs, or lost income. When insurance companies stall the process, policyholders may face mounting bills, increased stress, and, in some cases, financial ruin. Moreover, the longer the delay, the more leverage the insurer has to push for a lower settlement, which can leave the policyholder with less compensation than they need.
What Can You Do if an Insurance Company is Delaying Your Payment?
While some delays in insurance claims are understandable, many are intentional tactics designed to benefit the insurer at the claimant’s expense. If an insurance company delays your claim, you don’t have to accept it passively. Start by documenting every interaction. If the delay continues without valid reasons, consider speaking with an experienced Las Vegas Car Accident Attorney. A lawyer can help you navigate the claims process, push back against bad faith tactics, and, if necessary, file a lawsuit to force the insurer to pay what you are owed.