Fight Bad-faith Insurance Companies (FBIC) is an excellent site on getting the low-down on your insurance company. In previous posts it has been mentioned that there are no Federal or State laws that specifically regulate insurance policies. Sure, there are rules and regulations on how insurance companies conduct business, but when it comes to how policies should be written or enforced there are NO LAWS.
The worst insurance policy to have is a long-term disability (LTD) policy that falls under the guidelines of Employee Retirement Income Security Act (ERISA). If you make a claim on an ERISA covered LTD policy and have been denied benefits, you will be unlikely to find an attorney to pursue the matter. The major obstacles to finding an attorney to handle your lawsuit are that you must sue in Federal court, you are unable to collect attorney fees if you do prevail, and punitive damages cannot be awarded.
You will not have much luck with your state’s Department of Insurance (DOI) either. Of all the state DOI’s, California is probably the most effective one, and even it is powerless when it comes to a LTD policy covered by ERISA. In fact, no state regulates ERISA insurance policies. The state DOI’s only regulate how the insurance company conducts business in the state—not the policy itself.
What surprises most people is that no state will sue an insurance company on behalf of a policy holder. A state DOI will levy fines against an insurance company for fraud and criminal behavior, but even those fines are relatively rare.