What is Double Indemnity?

Double indemnity is a term used in life insurance and accidental death and dismemberment policies. Double indemnity clauses state that the insurance company will pay a specified multiple (double, triple, etc.) of the contract’s face value in the event of accidental death. 

Life Insurance and AD&D Policies with Double Indemnity Clauses

Consider a husband who purchases a life insurance policy with a double indemnity clause. The face value of the life insurance policy is $100,000. If the husband dies of natural causes, the policy pays face value: $100,000. 

A double indemnity clause states that the insurance company will pay double the face value if the death is the result of an accident. So if the husband dies as a result of an accident, a double indemnity policy pays out $200,000. 

Why would insurance companies agree to pay double or triple? Of all the deaths that occur in the U.S. each year, only a small fraction of those deaths result from accidents or unintentional injuries. Since the likelihood of a single person suffering an accidental death is low, insurance companies push sales of double indemnity clauses. 

When a death qualifies for a double indemnity payout, though, they may deny liability. If your loved one was covered under a life insurance or accidental death and dismemberment policy, an attorney can review the terms of the policy and answer any questions you have about coverage.

Deciding Whether a Death is Accidental

Deciding whether someone’s death is accidental can be difficult. Even if the cause of death seems accidental, insurance companies slip exceptions into their double indemnity coverage. 

Some accidental causes of death include:

But there are exceptions to nearly every category of accident above. 

Murder counts as accidental. Of course, insurance companies won’t pay if the beneficiary of the life insurance policy murders the insured party. In that situation, it wasn’t an accident: the beneficiary intentionally caused the death and stands to benefit from the insurance payout. 

Car accidents are another example where insurance companies create double indemnity exceptions. If the accident was caused by the negligence of the insured party, the insurance company might refuse to pay the benefits. 

Many double indemnity clauses have exceptions if the insured is intoxicated at the time of death. Suicide is another common exception in life insurance or death and disability policies.

What to Do When the Insurance Company Denies the Claim

Unsurprisingly, insurance companies are known to deny claims even when coverage applies. But it’s not as well known that you can dispute an insurance company’s denial of your claim. The terms of your policy may explain the dispute process, sometimes called an appeal, contestation, or challenge. 

When the insurance company wrongfully denies a claim, the burden is on the beneficiary to correct the mistake, unfortunately. You may be able to successfully contest an insurance company’s determination of suicide, negligence, or intoxication if you can prove the incident was an accident. Sometimes, this can be negotiated out-of-court in a settlement. 

What if the coroner fails to make a cause of death determination or records an ambiguous cause of death? If a reasonable insurance company would have honored the claim or managed it differently, you may have a bad faith insurance claim

Some indicators of bad faith include:

  • Denials without reasonable explanation
  • Unnecessary, repeated, or unusual delays in processing or paying a claim
  • Unconscionably low offer to settle your claim

You don’t have to accept an offer just because the insurance company sends a check. Talk to a personal injury attorney with an awareness of the latest developments in Texas bad faith insurance law.