On some level, most people understand how life insurance policies work. The policyholder pays monthly or annual premiums. In exchange, the life insurance company pays the policyholder’s beneficiaries a lump sum when the policyholder dies. What many people don’t understand, however, is that life insurance policies are rife with exclusions.
Exclusions are basically agreed-upon reasons why the insurance company might not have to pay out on a claim. Some common life insurance policy exclusions include cases of suicide, or situations where the policy beneficiary murders the policyholder. Most people understand these types of exclusions.
There are also lesser known exclusions that insurance companies rely on all the time in denying claims. One of their favored exclusions is known as the “inherently dangerous activity” or “reckless endangerment” exclusion. These exclusions basically excuse the insurer from having to pay a death benefit if the insured dies while intentionally engaging in an activity he knows is extremely dangerous.
In fact, some life insurance policies actually spell out the activities it considers too dangerous to insure. They typically include things like motorcycle racing or bungee jumping. Again, those types of exclusions make sense to most people. Where confusion arises, however, is when a policyholder dies while participating in a dangerous activity, but his participation isn’t necessarily “intentional.” This article explains one such case and illustrates how a claim denial invoking the “inherently dangerous activity” exclusion can sometimes be successfully contested.
The nightmare scenario for any father
The case involved a man named Phil. Phil was a successful contractor with numerous projects underway at any given time. In fact, he often had projects located 100 miles or more away from his home. As such, he often stayed out of town during the week so he could attend to those remote projects.
The only thing that bothered Phil about distant projects was the fact that they forced him to spend time away from his family. More than anything, Phil loved being a father. He had three children, aged 10, 8, and 3. He was particularly fond of the three year-old, Janie, who was his only daughter.
During one week in July, Phil was working on a project approximately 150 miles from his home. At around noon on a Wednesday, Phil received a call from his wife, Kate. At first, he didn’t answer as he was just about to order lunch. When a text came in immediately after the call with the succinct message “911,” Phil knew he had to call back right away.
It was the worst call Phil could have imagined. Kate told him that while Janie was playing on the playground at her pre-school, a car had veered off of a nearby roadway, crashed through the fence of the school, and run over Janie. The little girl was still alive, but had been rushed to a nearby hospital where she was about to undergo serious surgeries. Doctors listed her condition as critical.
Reckless behavior, but was it intentional?
Phil’s next move was one that will not be surprising to any parent. He rushed out of the restaurant where he was about to have lunch, jumped into his work truck, and headed for the nearest freeway onramp. Phil knew he had to get home as quickly as possible to be with his little girl.
Witnesses later said that they observed Phil driving at speeds believed to exceed 100 miles per hour. Others say he was dodging in and out of traffic and that whenever he got caught in a slowdown, he would drive in the median of the freeway until he got past the traffic jam. Several onlookers described his driving as “extremely dangerous.”
Unfortunately, Phil’s erratic driving only compounded matters for his family. About an hour into the drive, Phil lost control of his truck, veered into oncoming traffic and was killed instantly by a large truck.
The life insurance claim denial
A few weeks after Phil’s death, while she was starting to receive Janie’s medical bills, Kate realized that she needed to file a claim for death benefits under Phil’s life insurance policy. As required, she submitted a death certificate along with the police reports from the date of Phil’s accident.
The life insurance company denied the claim. The claim denial letter stated that Phil was intentionally engaged in an inherently dangerous activity (reckless driving) at the time of his death. It further stated that the policy contained an exclusion for this type of intentional behavior.
Under normal circumstances, Kate may have given up. She was facing massive medical bills from Janie’s accident, however, and knew she was going to need the life insurance money to survive. Consequently, she contacted an attorney who specialized in the wrongful denial of life insurance claims.
When the attorney reviewed the case, he was actually concerned about the contestability of the claim denial. Although he certainly understood why Phil had driven the way he did, it was going to be hard to convince the insurer that Phil’s conduct was not “inherently dangerous.”
Rather than immediately file suit against the insurance company, the lawyer decided to schedule an in-person meeting with its claims appeals board. In this case, that was a three person panel charged with reviewing claim denials alleged to be improper.
In the meeting, the lawyer relied heavily on human compassion combined with his strong persuasive skills. He argued that in light of Janie’s dire circumstances, Phil was not acting “intentionally” reckless. Instead, he simply didn’t have a choice but to get to his daughter as quickly as possible.
At the end of the day, the attorney’s arguments proved persuasive. The insurance company agreed to pay Kate’s claim over a period of years. While it was not the ideal result, it was one Kate may not have achieved without a specialized attorney who knew how to negotiate with the life insurance company for the best result.If you’ve had a life insurance claim denied and believe you need a lawyer’s help to contest that denial, please call us today. We’re here to help