WEDNESDAY, JULY 21, 2021
A conflict of interest is defined as when a person or entity's interests can be questioned on issues of bias. For instance, if someone assigned to an environmental protection group owns an industrial factory, that's a conflict of interest. It is difficult to trust someone to do what's best for the environment when that might mean regulating something from which they profit.
In general liability insurance, there is some inherent conflict of interest: The insurance company's biggest expense is paying out claims. The fewer claims they pay out, the more profit they keep. This works to your benefit when it comes to managing risk. They're going to give you good advice on preventing damages and injury, but it's fair to assume that there is some conflict of interest when it comes time to pay out a claim.

Using this logic, your claims adjuster theoretically has an interest in getting you to settle for a lower amount than you are entitled to — or in denying the claim altogether.
How Is This Conflict Of Interest Managed?
Under the theory of an unregulated market, an insurance company would be free to never pay a claim. However, there are several factors preventing this from happening in real life:
-
Regulatory groups. Your state's insurance board makes it difficult for insurance companies to operate unfairly. If they refuse to pay out valid claims, you can file complaints with the board. Your insurer may wind up having to pay out expensive fines on top of the claim. They might lose their right to operate in your state.
-
Lawsuits. As with any business, an insurance company that does not fulfill its promises is inviting expensive lawsuits.
-
Ethics. It's just plain bad business not to fulfill your obligations to your clients and customers. All the advertising in the world can't save an insurance company from a bad reputation if word gets out that they deny more valid claims than not.
While conflicts of interest do arise in general liability insurance, they are quite manageable. Most insurers would rather maintain their reputation and avoid having to pay fines than cheat their customers.
The best way to ensure that you're getting a fair payout on your claim is to read your policy. Don't be afraid to negotiate, and don't settle for less than you know your policy is worth.
No Comments
Post a Comment |
Required
|
|
Required (Not Displayed)
|
|
Required
|
All comments are moderated and stripped of HTML.
|
|
|
|
|
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only.
It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional
in your state. By using this blog site you understand that there is no broker client relationship between
you and the blog and website publisher.
|