Accidental Death and Dismemberment Claims
Dealing with the loss of a loved one can be a painful, difficult, and complicated process. The experience is often much harder when a loved one passed away suddenly and with little warning. After the funeral, you discover that you were the beneficiary of an accidental death and dismemberment policy that insured your loved one’s life. You make a claim expecting a smooth process. You then learn that the insurance company is not only making the process difficult, but they are also acting unreasonable by delaying or even denying your claim. Accidental death and dismemberment insurance can be extraordinarily complex to navigate on your own. Often, the reasons these claims are denied can be avoided-.
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What is Accidental Death and Dismemberment Insurance?
Accidental death and dismemberment, also referred to as AD&D, is different from a life insurance policy. This type of coverage is often added as a rider to a life or health insurance policy. Unlike most indemnity policies, AD&D coverage has limitations, and many potential claims can be excluded. It is important to be familiar with the coverage that is provided when making a claim to better your chance at having your claim accepted.
The purpose of AD&D coverage is to offer a payout when the person who is insured dies accidentally. As you might guess, the term “accidental” is often disputed and is a subject of many contested AD&D claims.
In addition, the dismemberment coverage in AD&D policies provides coverage when a person loses a bodily function. The determination of dismemberment is another issue that is often disputed by insurance companies. As discussed below, depending on the policy language, dismemberment can range from a loss of limb to a partial disability or limitation of a body function. Understanding the limitations of your AD&D policy is important to present a claim that is likely to be paid or to overturn an unfavorable coverage determination.
How is AD&D Coverage Different from Life Insurance
Life insurance is a broader type of coverage that has few limitations. A life insurance company typically has a two-year period to discover innocent misrepresentations or inaccuracies in the policy application. After the two-year period, a life insurance company can reject coverage on a few narrow grounds.
AD&D provides coverage when a specific type of occurrence – accidental death or dismemberment – occurs. For there to be a payout, there must be an accident that causes death or dismemberment.
What is Considered Accidental Death?
For an AD&D policy to payout, the policyholder’s death must be due to an accident. There will be no payout if the person died from a natural cause such as cancer, heart failure, or an extended illness. However, many people develop medical problems and die from a prior event, in which case, the death may be considered accidental.
It is important to consider what is an “accident” when making an AD&D claim. Typically, an accident is a sudden event such as car crash, slip and fall, or any type of incident in which negligence was involved. Many AD&D policies will provide coverage when the person whose life was insured accidentally caused their own death.
Many scenarios are not black and white. For example, a person may be seriously injured in a car accident and then develop a medical condition that is the eventual cause of death. Cases like that are often disputed and require the assistance of medical experts to provide opinions about the cause of death.
Most policies will not provide coverage when the person’s death is caused by one of the following:
Some policies include the requirement that the person must pass away within a specific time period following an accident. These time periods typically range from 90 days to one-year.
What Is Considered Dismemberment?
Many people forget that their AD&D policy also provides coverage if you become dismembered. AD&D policies specifically define what dismemberment means. In many cases, a policy will state that it means the loss of a part of your body such as an arm, leg, or eye. This does not necessarily mean that the body part was amputated. Rather, there may be coverage if you lose a significant amount function of a certain body part.
Policies typically coverage for a person who loses sight, hearing, or speech, or becomes paralyzed. Some plans will also provide AD&D coverage where a person is deemed to be permanently and totally disabled due to other medical conditions.
Most AD&D policies pay a percentage for the loss of a limb, partial or permanent paralysis, or the loss of use of specific body parts, such as the loss of sight, hearing, or speech. The types and extent of injuries covered are particular to and defined by each insurer and policy. It is uncommon for a policy to pay 100% of the policy amount for anything less than a combination of the loss of a limb and the loss of a major bodily function, such as sight in at least one eye or hearing in at least one ear.
What is Paid Out in an AD&D Claim?
When there has been an accidental death, the AD&D policy will normally pay out the full death benefit.
If you are dealing with an AD&D claim you may have heard of the term “double indemnity.” This means that the payout will be double the face value of the policy. It is important to remember that AD&D policies are normally issued as a rider to a life insurance policy. When a person dies from an accident, the payout may include both the death benefit from the life insurance policy plus the AD&D benefit.
The payout on a dismemberment claim usually depends on the type of injury. Often, the policy will specifically provide for a partial payout when you lose a single body part. When a person loses function of multiple body parts, or becomes paralyzed or permanently disabled, the full value of the policy is paid.
Common Reasons an AD&D Claim is Denied or Delayed
Insurance companies are notorious for denying and delaying valid claims. This is no different for AD&D claims.
Death claims are normally denied because the insurance company believes the claim is excluded by the policy. Here, it is important to read the policy and understand both the case law that has interpreted it as well as the insurance codes that apply to AD&D policies.
It is important to realize that under the law, exclusions are never favored, and courts interpret exclusions narrowly. Despite this, an insurance company or plan administrator may interpret the exclusion wrongfully to deny a valid claim. Here are just a few examples about how exclusions are interpreted incorrectly:
Another problem with AD&D claims is the insurance company’s delay in deciding if it will pay your claim. Some claim decisions cannot happen immediately because the insurance company needs to gather document, conduct interviews, and review evidence. However, if the insurance company is not making prompt progress on its claim decision, an attorney may assist with your claim.
Know if Your Claim Falls Under ERISA
Many insurance policies are provided through your employment including AD&D coverage. Insurance provided by your employer is governed by an incredibly complex law called the Employee Retirement Income Security Act (“ERISA”). Under ERISA, once you receive a denial, you have strict timelines to make an administrative appeal of a claim denial.
The appeal procedure for an ERISA claim is highly technical. You will need to request the summary plan description and plan document. These records will provide the appeal procedures for your claim along with information regarding AD&D coverage. It is important to act fast when you AD&D claim has been denied because you may have as little as 60 days to appeal.
It is also important to make sure that you present all evidence supporting your claim on administrative appeal. If you do not include all relevant information at the administrative appeal stage, you will not be able to present it if you must file a lawsuit and go to court.
What to Do if Your Claim Has Been Denied
For AD&D death cases, the medical examiner or the local coroner may carry out an autopsy if a sudden death has occurred. It is important to obtain a copy of the autopsy report to support an AD&D claim. However, if the cause of death is listed as “natural” on the death certificate, the insurance company will likely deny the claim. It is common that a death certificate contains inaccurate information about the cause of death or does not fully consider whether death was from an accidental cause.
If your claim has been wrongfully denied, consult with a reputable attorney to assess your case as soon as possible. You have a very brief time period to appeal a denial and failure to appeal timely will prevent you from contesting the claim. An experienced attorney should understand how AD&D policies work and can provide different strategies to support your claim.
We encourage you to contact The Johns Firm for a no-cost consultation where we evaluate your case and explain your options. With our knowledge and years of experience, we can help you resolve insurance claim.