May 28, 2015

Insurance Class Action

Insurance Class Action

Among the more high-profile class action lawsuits of late, many have concerned insurance companies. While insurance companies provide a service that is supposed to help the insured in times of needs, insurance companies are ultimately in the business of making money. For this reason, insurance companies will sometimes engage in systematic behavior that is designed to increase profits, but that also leads to their obligations to those that they insure not being met.img3

When this happens, an insurance company opens itself up to the possibility of a class action lawsuit. Often, the actions that an insurance company takes may go unnoticed by the insured. For example, an insurer may systematically underpay its claims by a small amount. On an individual level, an insured individual may not even notice the difference or, if he or she does notice the difference, it may not seem large enough to pursue legal action over. In these cases, though, an insurer should be held accountable, and a class action will hold that insurer to task, while also providing relief (however minor) for the insured individuals who were affected by the insurer’s actions.

The insurance industry contains a number of different entities providing insurance for a wide variety of things. Because of this, the kinds of insurance class actions vary. We will be exploring the most common kinds below.

Health Insurance Class Actions

Health insurance has become a hot-button issue in the United States ever since the Affordable Care Act was first introduced. Since it has gone into effect, health insurers have had to find different ways of preserving their bottom lines, which has led some to act in bad faith.

Given the complexity of health insurance – what it does and does not cover, for example – there is a lot of room for issues to arise. For example, an insurer may systematically refuse to pay out claims or coverage for certain procedures, which in actuality should be covered by the terms of the policies that it has written. In these cases, the affected insured individuals can form a class to seek relief from the health insurer.

Title Insurance Class Actions

When purchasing a property, having an accurate title search is essential. However, a title search may not always reveal issues with the title, which can lead to the new property owner being subject to liens, lawsuits and other legal issues. For this reason, many homeowners purchase title insurance to protect themselves in these cases.

There are a number of different businesses that provide title insurance, and not all of them are created equal. In some cases, those that provide title insurance may also be in business relationships with those who provide title searches. This conflict of interest can lead to malfeasance, and can systematically harm a class of individuals.

Homeowners Insurance Class Actions

In almost every case, a homeowner is required to have homeowners insurance for his or her property. Given that homeowners insurance is so common, the opportunities for malfeasance are myriad, given that those who provide homeowners insurance have, to a certain degree, a captive audience.

Following natural disasters or other incidents that affect a large number of homeowners, insurers may attempt to deny coverage for homeowners in an attempt to preserve their bottom lines. When this attempt to deny coverage falls outside of the bounds of the terms of the insurers’ policies, the homeowners who are affected can form a class to seek relief from the insurer.

All Forms of Insurance

The above are the most common forms of class actions as they pertain to insurance. However, any form of insurance can become the subject of a class action lawsuit. There need only be a systematic issue with the insurer’s service and a class of individuals who are adversely affected by that systematic issue.