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Dawson and Rosenthal
Dawson and Rosenthal

San Diego Short-Term Insurance Denial

Most types of insurance function on a long-term basis. For example, an auto insurance policy may cover a full year or several years, requiring the policyholder to renew when the policy coverage period ends. Some types of insurance may span even longer, but some consumers prefer insurance policies with lighter obligations. Short-term insurance can be an affordable way to obtain insurance coverage when you need it, but it’s vital to know how short-term insurance works and what you’re signing before you start paying for any short-term insurance policy.

What Is Short-Term Insurance?

As the name suggests, short-term insurance typically extends a short time, usually less than one year or a few months. These policies exist to cover gaps in coverage or short-term insurance when needed. However, short-term coverage is very specific, so many applicants don’t qualify. Many types of short-term insurance policies are available, including:

  • Short-term health insurance. Short-term health insurance policies have changed recently, but it’s important to remember that they virtually never cover preexisting conditions.
  • Auto insurance. Some drivers purchase temporary insurance policies when they live out of state for an extended time, travel for work, or rent vehicles for travel.
  • Personal liability insurance. This can help cover the damages for a household accident or any other damages for which the policyholder would be personally liable.
  • Renters insurance. You can purchase insurance to cover a rental property or liability during a rental period.

Why Do Insurers Deny Short-Term Insurance Claims?

Short-term insurance exists to provide temporary coverage, so the insurers want low-risk policyholders. Since they cannot rely on long-term revenue from premiums with short-term policies, they want to ensure that they will potentially pay out on as few policies as possible. For example, a short-term health insurance plan may be perfect for someone traveling for a month or two who is in good health but may require a visit to the doctor for a minor illness or injury. Short-term insurance would not be a financially sound arrangement for an individual with a preexisting or severe medical condition requiring extensive treatment, so such applicants typically won’t qualify for short-term insurance.

Since short-term insurers want to keep risk low, policies are generally very strict and have very specific disclaimers for what a policy does and does not cover. If a claim falls in a gray area, it wouldn’t be unexpected for the insurer to deny the claim, hoping the claimant does not pursue the matter further. This is a bad faith tactic that policyholders need to know how to handle.

Short-Term Insurance Bad Faith Laws

Although insurance companies that sell short-term policies ideally want to keep risk as low as possible and pay on as few claims as possible, they still have an obligation to process all claims in good faith. Deceptive correspondence, misrepresenting a policy or the law, intentionally hiding relevant aspects of a claimant’s coverage, and other unethical bad faith insurance tactics can leave an insurer liable for the claimant’s damages. California upholds a law requiring good faith and fair dealing in all insurance transactions, and insurers who violate this law are guilty of insurance bad faith.

Why Do You Need a Lawyer?

An attorney can make a tremendous difference in the outcome of your short-term insurance bad faith lawsuit. Most short-term insurance policies are incredibly specific, so an attorney with experience in insurance bad faith laws will help determine the insurer’s level of liability.

Contact the Dawson & Rosenthal team today for a consultation about your short-term insurance bad faith claim. If we determine an insurer acted in bad faith with your short-term insurance policy, we can advise you of your next best steps.