Questions and answers about the insurance claims process are summarized below.

Q: How can an insured party find out the status of an outstanding claim?

A: In the case of MHRRG or Scottsdale policyholders, the fastest way to get information is by contacting Negley Associates. Negley has a computerized database on the claims, and can refer to the right person at Scottsdale Insurance Company if more information is needed.

Q: Why can't I choose my own attorney to defend a claim?

A: This is usually not the best option for economic and practical reasons. The insurance company (in this case Scottsdale) deals with experienced defense attorneys everyday; you, the insured, do not. As a result, the insurance claims specialist has a good idea of when a claim is being handled skillfully, and when the attorney's billings are appropriate and fair. In addition, the insurance company handles a large volume of claims, so that the attorney they hire has the incentive of possible repeat business, if the claim is handled well. Experience has shown that the cost of claims is kept much lower when an insured's attorney is not used, and this, after all, is the bottom line. If claims costs are not kept as low as possible, then premiums will rise, and no one wants that.

Q: Why can't I refuse to have a claim paid if I know we did nothing wrong?

A: Again, the answers to this question are mainly economic. First of all, once you have paid the premium for your insurance, the risk of payment has been transferred to the insurance company. "Pay" and "don't pay" decisions, therefore, belong to them, since it is their money that will be paid. Experience with thousands of claims has shown that to save money, claims must be handled objectively, with cost as the main consideration. Juries are far too unreliable, and even if you are clearly "in the right," and adverse monetary award often occurs. Thus, the cost of an insured's righteous indignation is simply too expensive. Your insurance would cost much, much more if this was the way claims were handled.

Q: Does this mean that as the insured, I have nothing to say in the event of a claim?

A: On the contrary, the insurance company needs and wants your input. They welcome your suggestions regarding claims. It is analogous to a doctor treating a patient. The best care results when the patient gives a complete history, and relates the symptoms as clearly as possible. In the same way, the insurance claims examiner needs to know as much as possible about the claim, and needs to know the truth. Once the claim has been properly and completely reported, however, it is wise to let the insurance company take charge. They have the experience and lack of emotional involvement that is essential in getting the claim properly resolved.

Q: How are claim reserves determined?

A: The claim reserve is the amount of money the insurance company estimates will be needed to settle a given claim. It is based on the historical value of similar claims in that jurisdiction, and is, by its nature, only an approximation. That is why the insurance company needs to view its reserves at frequent intervals, and adjust them up or down as events develop and more knowledge is gained.

For more information, contact Marilyn Udis, Vice President of MHRRG, at Negley Associates (973) 239-9107.