Cushioning The Blow: How One Phone Call Can Avert a Bad Faith Claim

Two adjusters issue identical coverage denials on the same day. One fires off a form letter filled with policy jargon. The other picks up the phone first.

Six months later, the first adjuster faces a bad faith lawsuit, a blind-sided insurance agent, and a furious, soon-to-be ex-customer. The second just renewed a policy with a grateful insured who understood why their claim couldn’t be covered or paid.

The difference? A five-minute phone call.

In an industry built on relationships and trust, delivering bad news solely through cold correspondence is not just poor customer service, it’s a missed opportunity to build goodwill and avoid future headaches.

Problems with ‘Letter-First’ Communication

When adjusters rely only on written communication to deliver unfavorable coverage decisions, they’re essentially prioritizing speed over effectiveness. Yes, drafting a “standard” denial letter or reservation of rights notice is quicker, more antiseptic. Copy and paste policy language, fill in relevant details and move to the next case. But this method treats one of the most important parts of claim-handling—delivering bad news—as just an administrative task.

The reality is that receiving an unexpected coverage denial or reservation letter can be devastating for policyholders. They bought insurance for peace of mind, only to face the possibility that their safety net has Swiss-cheese-like holes. When this news arrives unexpectedly through an impersonal letter, the natural reactions are often anger, confusion, and an immediate call to an attorney.

The Power of A Phone Call

Making a phone call before sending formal correspondence changes the entire dynamic of interactions. Instead of surprising the insured or claimant with bad news, you’re offering context, explanation, and most importantly, a human voice during a stressful moment.

This proactive approach serves several purposes. First, it shows respect for the policyholder or claimant and recognizes that you understand the importance of the decision. Second, it allows immediate clarification of any questions or concerns. Third, it can uncover additional information that could affect your analysis—details that might never surface through written communication alone.

When you call first, you’re also shaping the story. Instead of letting the insured interpret legal language and policy provisions on their own, you can explain—without playing lawyer—your reasoning, address their specific concerns, and guide them on the next steps.

Managing Difficult Conversations

Let’s be frank: these conversations are tough. Delivering bad news is one of the toughest parts of an adjuster’s job. It’s natural to want to avoid a potential confrontation that comes with a phone call. Policyholders may be upset, argumentative or emotional. Some might yell, threaten you or make unreasonable demands.

However, these challenging moments are exactly when your professionalism and communication skills are most important. Staying calm, empathetic and factual helps reduce tensions and shows good faith. Remember, you’re not calling to debate or argue—but to inform and clarify.

Prepare for these conversations by having all relevant facts easily accessible. Be ready to explain your reasoning clearly and briefly. Expect common questions and concerns. Most importantly, listen actively to what the insured or claimant tells you. Sometimes their responses will reveal information that impacts your coverage or liability decision.

Dual-Track Communication Strategy

An effective approach blends the personal touch of a phone call with the documentation requirements of written communication. This dual-track strategy ensures that you meet both customer service expectations and business needs.

Start with the phone call. Explain your findings, answer questions and provide context for the formal documentation that will follow. Then, only after that, send the written correspondence. When you send the letter, reference your previous conversation to link the two communications.

This approach also helps you assess the insured’s reaction and tailor your written communication accordingly. If they are confused about certain policy provisions during your call, provide further explanation in a letter. If they raise specific concerns, address those directly in writing.

Risk Management Bonus

While making initial phone calls takes more time, this approach often yields significant risk management benefits. Policyholders who feel heard and respected are less likely to quickly seek legal representation from Dewey Cheatum & Howe, PC. They are more likely to accept unfavorable decisions when they understand the reasoning behind them. (Tip: Keep the insurance agent or broker in the communication loop as well, so they don’t get blindsided by a call from an irate claimant.)

This doesn’t mean that proactive communication will prevent all bad faith claims or defuse all disputes. It won’t. However, it builds a record of transparency and good faith effort that can be valuable if disputes arise. Courts, jurors, and regulators often view insurers who show genuine attempts to communicate clearly and fairly with policyholders and claimants favorably.

Building Long-Term Relationships

Insurance is fundamentally a relationship business. Even when you must deliver unwelcome news, the way you do so shapes your ongoing relationship with your insured. A considerate, personal approach to difficult conversations can build trust, even in tough situations.

Policyholders who perceive that the insurer treated them fairly—even when denying a claim—are more likely to stay loyal customers and recommend the company to others. Conversely, those who feel they were treated dismissively or impersonally often become vocal critics and former customers.

Do’s and Don’ts for Phone Calls

To make these calls effective, adjusters should follow some practical guidelines:

Do’s:

• Prepare in advance with the claim file and policy provisions at hand.
• Start the conversation with empathy, acknowledging disappointment.
• Use plain language. Keep explanations brief.
• Allow space for the claimant to react and ask questions.
• Actively listen, noting any new facts that may affect the claim decision.
• Stay professional and calm under pressure.
• Document the call immediately afterward.
• Keep the agent or broker in the loop.

Don’ts:

• Don’t argue or try to “win” the conversation.
• Don’t recite jargon-heavy policy language without explanation.
• Don’t make promises beyond your authority.
• Don’t get defensive if motives are questioned. Don’t get ego-invested in your stance but be open-minded.
• Don’t rely on the call alone, always follow with written documentation.
• Don’t speculate about legal consequences or outcomes.

Anticipating Objections and Questions

Policyholders and claimants often react with predictable concerns. Adjusters should expect questions and comments such as:

• “Why did I even buy insurance if it won’t cover this?” → Acknowledge the frustration, then explain the intent and scope of coverage.
• “But my neighbor’s insurance paid for the same thing!” → Clarify that every claim depends on unique, specific facts and policy wording.
• “This is unfair/You’re just trying to save money.” → Reassure that your role is to apply the policy as written, not make financial decisions.
• “I’m going to get a lawyer!” → Respect their rights while reiterating your goal to ensure they understand the decision.
• “Can’t you make an exception?” → Clarify your authority limits while focusing on transparency.
• “What do I do now?” → Offer guidance on appeal rights or next steps and direct them to the forthcoming letter. Do not discourage anyone from speaking with or retaining a lawyer.

Bottom Line

You have a choice to make, and you’ll face it as early as tomorrow: Will you be the adjuster who hides behind policy language and form letters, or the one who builds bridges through candid conversation?

Here’s the challenge: For the next 30 days, make a pre-letter phone call for every coverage denial or reservation of rights. Keep a simple log—note the policyholder’s reaction, any new information discovered, and the overall outcome. At month’s end, you’ll have documentation to show yourself, your supervisor, and your company that this approach isn’t just the right thing to do, it’s the smart thing to do.

The phone is waiting. Your next policyholder or claimant is counting on you. Make the call that makes the difference.

Quinley is an expert witness on bad faith cases. He has 48 years of insurance claim experience and is the founder of Quinley Risk Associates LLC. Email: claimscoach@gmail.com.