UNJUSTIFIED REDUCTION OF INSURANCE PAYOUT? IT COULD COST YOU HUNDREDS OF THOUSANDS
Several times a day. That's how often we encounter cases where an insurance company decides to reduce the insurance payout after a claim is reported, paying the claimant only a fraction of the adequate amount. But this isn't always justified, as was the case with one of our clients.
A few weeks ago, one of our clients reached out to us for help. Their vehicle was damaged in an accident for which they were not at fault, and the insurance company assessed the vehicle damage as a total loss and paid the client the insurance payout.
However, the client felt the payout was too low, primarily because the insurance company had set a low general value for the vehicle, which then determined the payout amount. The insured client therefore asked the car service to appraise the vehicle using the Audatex system, whose calculations for spare parts and vehicles are generally accepted by insurance companies. Despite the Audatex calculation showing a higher vehicle value, the insurance company refused to recalculate the payout amount.
Thorough Argumentation is Key
At this point, the client approached us for assistance. Although the discrepancy between the insurance company's calculation and the Audatex report provided by the client was clear, we needed to gather additional arguments for negotiations with the insurer.
We utilized online platforms that compare vehicle prices at dealerships. With their help, we demonstrated that several vehicles of identical make, engine size, performance, age, and similar mileage could be purchased on the market for a significantly higher price than the insurance company's valuation.
Our Client Recovered Tens of Thousands of Crowns
Armed with these arguments, we initiated negotiations with the insurance company. They accepted our reasoning, re-evaluated their original payout calculation, and subsequently made an additional payment to the insured client's bank account.
Thanks to our intervention, we secured tens of thousands of crowns extra for the client within just two business days of them contacting us. Crucially, the dispute did not need to be resolved in court.
Disputes often have to be resolved by courts
Resolving similar cases through litigation is not uncommon. Insurance companies often rely on the fact that the injured party is not an expert in insurance (and law), or that they won't want to go to court over a few thousand, waiting several years for a decision, all with the risk of failure and subsequent legal and administrative costs. However, there are numerous rulings from various court instances that rule in favor of the injured parties.
Beware of Insurance Mistakes
In some cases, however, the reduction of insurance benefits by the insurance company is justified, for example, due to underinsurance of property, which became evident when resolving insurance claims after the summer tornado rampage in the Hodonín region.
The entire problem usually lies in the fact that a client builds a structure, insures it, but fails to update the insurance. Meanwhile, the property's value increases, partly due to rising labor and construction material costs, but also due to inflationary pressures.
So, if a client insured a production hall for, say, 10,000,000 CZK 10 years ago, its value might now be around 13,500,000 CZK. If a catastrophic fire then occurs, the insurance company will not cover rebuilding invoices for 13,500,000 CZK, nor even 10,000,000 CZK, but only 7,407,407 CZK.
This is because the insurance payout is reduced proportionally to the extent the property is underinsured.
Assistance with Insurance and Dispute Resolution
We naturally prevent such cases. Therefore, one of the first things we address with new clients is an insurance protection audit and potentially risk assessment.
We analyze gaps in insurance coverage, propose optimization recommendations, and then implement them after consulting with the insured client. This means that, among other things:
- we conduct a tender process within an optimized scope or prepare the technical insurance section in the tender documentation for public procurement for public sector entities,
- we tender for insurers
- we service the procured contracts (green cards, additional insurance for new assets)
- and then we help clients with the settlement of insurance claims.
You save time and stress
Our clients, even in the most complex cases, hardly have to worry about a thing. We'll handle everything.
They just need to send us the necessary documents, and subsequent communication with the insurance company is entirely our responsibility. This way, our clients are shielded from all communication with insurance company employees, which saves them stress, but most importantly, time.
We'd be happy to help you with that too. Reach out to us – we'll review and optimize your existing insurance policies. We are Eurovalley, an insurance company with 30 years of experience.
Author
Let's talk about protecting your business and organizations.
Effective insurance starts with understanding risks. We help clients identify, assess, and manage risks so that their insurance strategy aligns with their real-world operations and long-term vision. Our insurance consulting connects detailed analysis with executive-level decision-making processes.
