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Disability Insurance follow-up: Killer negotiating strategies with hard-nosed insurance companies

By CO Staff @canadaone |

Imagine the worst-case scenario: You've paid into your disability insurance policy for 10 years and now you need to collect because of a work-related injury, but your insurer refuses to pay your benefits over a technicality. What do you do? How do you react? What strategies do you implement to persuade your insurer that they have made a big mistake?

First of all, never procrastinate. Don't wait for the illness or the injury to strike before identifying a good disability insurance lawyer who will help you negotiate with the insurance company out of court. The last thing you will want to do in your hospital bed is shop around for an excellent and inexpensive lawyer who will be in a position to take your case.

It's a mistaken belief that all lawyers and law firms have the expertise and resources to deal with disability insurance cases (which tend to be very lengthy and costly). It is important, therefore, to make the acquaintance of at least one or two lawyers in the event that you find yourself in a difficult position with your insurance company. To obtain a list of solicitors who specialize in this area, call the Law Society of Upper Canada at 416-947-3330 or visit the website at and perform a certified specialist directory search.

Preparation is key to successful negotiation and settlement with any insurance company, according to David Lackman, of Lackman, Firestone in Toronto. It is critical to obtain a good understanding of the claim background – this means a client must obtain the claim file from the insurer to know what information the insurance company has been operating with and to understand the basis of the denial of your claim, Lackman said.

Insurance companies are not always willing to part with the complete file, he added, but the more information you are able to gather, the more solicitors are able to evaluate the claim and chart effective strategies.

Obtaining a certified copy – or a master copy – of an insurance policy is also critical, according to Robert Carfra, partner in the Victoria, B.C., law firm of Cardinal Emberton Rusk & Carfra, who specializes in small business legal consultation and litigation. "My experience is that insurance companies will tell you that certain things are not payable, but when you get your hands on the master contract, it is arguable. They [the insurance companies] say it's not. But, the way it's worded, it becomes nebulous," Carfra said.

Lackman explained that the first thing he looks for in a claim file is whether the medical information reasonably supports the disability claim. In many instances, Lackman said, the insurer has not sent the claimant to any specialist before denying them benefits and that leaves room for negotiation.

"Denial decisions made without any intervention by a specialist occur frequently," Lackman admitted. "You have to review the file with a fine-toothed comb," he said. The logical strategy Lackman would take is to call into question the lack of medical evidence to support the insurer's denial.

"If you haven't prepared, you may as well go home," Cafra explained. He said that to engage in shrewd bargaining with an insurance company, it is necessary to gather excellent medical evidence that supports the claim. In cases where the insurance company asks that an independent medical examination be performed on the claimant by a physician of their choice, Cafra said clients should exercise their right to schedule an appointment with that physician at a time when their injury is most apparent.

Cafra added that a willingness to play hardball is critical to successful negotiations with insurance companies. He explained that a tactic used by some insurers is to deliberately cut people off temporary benefits in the hope that they either won't have the finances to pursue legal action or won't have the emotional strength to fight for their right to collect disability. He advises clients not to give up when claims are denied, even though quitting may be the easier route to take.

"In this one case, the company concluded that the woman was well after 6 weeks of benefits, based on no medical evidence, and they cut her off," Cafra said. "Her doctor became involved and filled in the necessary forms that were required, but they [the insurance company] ignored it … Insurance companies will try people on for size and see what happens. The women launched a lawsuit, and four weeks later the payments started all over again," he said.

Both lawyers agreed that, in the end, good negotiation strategies hinge on the honesty of individual people. Each lawyer said that they were able to maximize recovery on cases that had three critical elements: a sincere client, well-documented information and medical expertise that proved the accuracy of the claim.

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