Long-term health insurance is an absolute necessity for many aging people. It promises that you will be well cared for, regardless of your needs, when those needs expand beyond what shorter visits to doctors and hospitals can fulfill. But this does not mean that your insurer has your best interests in mind when they evaluate your claim.
What are punitive damages?
‘Punitive’ is another word for ‘punishment’ and that’s what separates punitive damages from other types of damages awarded when your insurance claim is just. It’s a way of saying that the insurer didn’t just make a mistake in denying your claim, but they did so in a particularly harmful way, both to you and to society.
Let’s say you enter a nursing home and file a claim with your insurance company, looking to have your time in the home covered by your long-term care policy. But the insurer denies your claim by saying that the facility you’ve chosen does not meet the proper definition of ‘facility’. And as a result, they don’t owe you anything.
Now, mistakes happen, even with insurance companies. But it’s also important to understand that your insurance company is not in the health care business. It doesn’t make money by providing you with health care – it makes money by selling insurance. And the more money it must pay out on insurance claims, the less money it makes.
When their denial of your claim goes from something like a mistake or a disagreement to a willful denial, knowing that coverage should have been granted instead, this is the type of conduct for which punitive damages exist – to punish them for wrongdoing. It is money they will be required to pay to you, in addition to any money they would have paid had they approved the claim to begin with.
That’s why it’s always smart to speak to a professional when you’re having trouble with a denial of long-term coverage. They can investigate and look deeper into the denial, so that not only does your claim get approved but the insurance company can be held responsible for their actions.