Most Baltimore personal injury lawyers will tell you the practical answer is "No", they don't. The Maryland Insurance Code tells us it is unlawful for an insurer to deny a claim for "arbitrary" or "capricious" reasons.
Unfortunately, one man's caprice is may well be another man's well-reasoned approach.
Claims are denied- frequently. Unfortunately, we're given little guidance on what "arbitrary" or "capricious" reasons look like -as there are only a few  decisions discussing this provision. The reality is, some insurance companies like GEICO will send you a form letter stating they don't understand how you can be hurt because there was no property damage. Other insurance companies like State Farm or Allstate will send out form letters stating they believe their insured's version of events, not yours. Often, and this is particularly true in the district court where discovery is limited, the real basis on which the claim is contested may not come out until trial. What I've found out is that while the reason for this denial is valuable -it tells me what I need to prove or attack at trial, and in that sense vital information- becoming fixated on the reason is pointless. I've seen that data on underwriting ["claims" ] losses sustained by the major porepty casualty insurers, and the data that shows the insurance industry does not make money on claims, but on investments. Nevertheless, I know from first-hand experience that insurance companies are in the business of denying claims.
-This Article was updated by Eric Kirk on 9/19/19.
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