As insurance recovery attorneys, we spend a large chunk of our time fighting insurance companies in court, and another large chunk negotiating claim settlements. Obviously we feel strongly that litigation is all too often the only viable course for a policyholder pursuing the coverage they've paid for.
We also recognize, however, that litigation is a last resort — and more often than not, avoidable on fair terms. Policyholders can do much, throughout the claim process, to expedite and maximize recovery without resorting to litigation.
Maximizing recovery requires an understanding of the economics of insurance. Insurance companies make money by minimizing their loss ratio (the ratio of premiums to claims payouts) and maximizing float (the time lag between premium collection and claims payout). Effective claims pursuit requires policyholders to exert time pressure, minimizing float, and to provide copious information promptly, facilitating the insurance company's own reinsurance claim and thus boosting its loss ratio.
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