Understanding why insurers deny claims helps you recognize when a denial may be improper. Insurance companies cite several reasons for claim denials:
Policy Exclusions and Coverage Limitations: Your policy may exclude certain types of damage or losses. For example, homeowners’ policies typically exclude flood damage. Auto policies may exclude damage from wear and tear. However, insurers sometimes misapply exclusions. They may also misinterpret policy language. If you believe your homeowners’ insurance claim was wrongfully denied due to a misapplied exclusion, we can review your policy and challenge the denial.
Procedural Errors by Claimants: Insurance companies require policyholders to follow specific procedures when filing claims. Missing deadlines can result in claim denials. Failing to provide the required documentation can too. Not following notification requirements can also lead to denials. However, insurers must act reasonably in enforcing these requirements.
Disputed Liability: In auto insurance claims, the insurer may dispute who caused the accident. If the insurer determines that their policyholder was not at fault, they may deny the claim. They may also limit coverage. This is particularly common in hit-and-run accidents where liability is contested.
Alleged Policy Violations: Insurers sometimes claim you violated policy terms. Examples include failing to maintain your property or misrepresenting information on your application. These violations must be material and proven by the insurer.
Insufficient Documentation: Insurers may deny claims when you fail to provide adequate proof of loss. This includes repair estimates, receipts, or medical records. However, you have a reasonable time to gather and submit this documentation.
Timing Issues: Some claims involve disputes about when damage occurred. Others involve disputes about when you should have reported it. Insurers may deny claims they believe were reported too late. However, state law typically provides reasonable timeframes for reporting. If you’ve suffered catastrophic injuries from an accident, your insurance company may attempt to deny or minimize your claim.
When an insurer denies your claim, review the denial letter carefully. The insurer must provide specific reasons for the denial. They must cite the policy provisions supporting their decision. If the reasons seem unclear, incomplete, or unreasonable, you may have grounds to challenge the denial.
