Get Shorty: The Initial Steps in
Addressing Short Payments
by Charles J. Lloyd
Almost every day, I get phone calls from glass shops asking me what to do about short payments from insurance companies. For whatever reason, short payments seem to be on the rise around the country. What I hope to accomplish here is to provide you with information to help you address a short payment should it happen to you. Of course, the information in this article is general in nature and should not be taken as legal advice. If you have a legal question, you should consult competent legal counsel.
Believe it or not, much of the battle about short payments is won or lost before the first shot is ever fired. You need to have things in place before you receive your shortened payment, before you submit your invoice and before you do the installation. These things will prove useful in persuading someone that you are entitled to be paid for more than you originally received from the insurance company.
The first thing you need to do is have your invoice and/or work order thoroughly reviewed. The standard authorization to pay inadequately protects you in short pay situations. As a result, you must have your work order or your invoice carefully reviewed by an attorney who understands these issues. The customer needs to sign as an assignment of policy proceeds, not simply an authorization to pay the glass shop directly. The technical assignment language is crucial because it allows you to step into the shoes of the insured and pursue the claim directly. Without it, insurance companies are virtually free to ignore you. The technical language is also important. This is because insurance companies may argue the assignment is invalid because the policy likely provides that no rights may be assigned without the written consent of the insurer. In most states we are aware of, if the assignment of policy proceeds is worded properly, the anti-assignment provisions of the insurance policy do not apply.
A second critical step is the collection of insurance policies. It is the policy language that primarily controls what the insurer has to pay on any given claim. The insurance relationship is contractual and the obligations of the parties are stated in the contract/policy. Thus, in order to seek additional payment, you first need to have a basis in the policy.
Start by getting out your own policy and put it in a file. Ask for your employees help in gathering policies from their different insurers.
You also need to locate any regulations in your state that may contain requirements for payment of glass claims. These may supplement the insurers obligations of the policies. In most states, insurers are not permitted to offer coverage below what is required by statute or regulation. Those things may require the insurer to pay more than what the terms of the policy itself provide.
You also need to collect data that the insurers send out about market prices. This is useful to show the particular insurer shorting your bills is out of line with the market. Find out how many insurers are licensed to write automobile insurance in your state. Chances are the proportion of companies that short pay is very small. That may show that the insurer is out of the mainstream.
It may not be obvious why this information is required but when we discuss strategies later on, I hope you will see the benefit of having these items in your arsenal. There is no question that fundamentals and a solid informational foundation are key to giving yourself the best opportunity to address short payments. Without them, your complaints may be lonely cries in the wilderness.
Chuck Lloyd is a partner in the Minneapolis, MN, law firm of Lindquist and Vennum.
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