What Happens if Your Insurance Claim is Denied?
Insurance companies can deny claims for a multitude of reasons, and sometimes they do so rightfully. But if you feel your claim was wrongfully denied, you can pursue legal action to get the settlement you deserve.
Before seeking legal council, read the fine print of your insurance policy. You may have overlooked a subtle detail that led to your claim’s denial. By reviewing your policy, you might find that you can refile your claim.
However, if you can find no error in your claim but feel it was wrongfully denied, you can take steps to work with your insurance provider to reach a deal with which you are both satisfied.
Why Do Claims Get Denied?
Insurance companies sometimes deny claims for insidious reasons, but they are required to provide reasoning for denying a claim.
Valid reasons insurance claims get denied include:
- Your claim exceeds your coverage. If your insurance covers $30,000, but you file a claim for $40,000 in damages, you will not receive the extra $10,000.
- Your insurance does not cover the specific incident. For example, suppose you do not have comprehensive vehicle coverage. In that case, you cannot file a claim for non-collision-related damages to a vehicle like vandalism or falling objects.
- You provided false or inaccurate information on your application. Insurance companies hire insurance claims adjusters to scrutinize applications closely. If you fail to disclose an important detail, your insurance company will likely catch it and deny your claim that might otherwise have been processed. False information can include things as minute as underreporting mileage or omitting vehicle upgrades.
- You broke the law during your claimable accident. If you were in an accident that was not your fault but were intoxicated or driving without a license at the time, an insurance company could still deny your claim.
- You reported the incident too late. If you were injured in a car accident but did not seek timely medical attention or did not report to the police or your insurer on time, your claim can be denied. Even though injuries can take time to develop, filing a medical claim weeks or months after an accident usually arouses suspicion.
All of the above reasons are valid grounds for your insurer to deny your claim, and contesting the denial might result in a loss.
What to Do if Your Claim is Denied
If you are sure your claim was unjustly denied, you can pursue legal action.
Filing an Appeal
If your insurance provider denies your claim, you are legally entitled to file an appeal and have a third party review it. Do not sign any paperwork or cash any insurance checks before filing a dispute. Doing so may be taken as your agreement to a settlement.
If you have a valid reason to dispute the denial, you can file one of two types of appeals:
- Internal Appeal. In an internal appeal, your insurance company will conduct a full review of their decision to see if they made any errors in judgment.
- External Appeal. In an external appeal, an independent third party reviews and mediates your case. Insurance companies have less authority in an external appeal.
Filing an appeal requires no legal representation and is more cost-effective, but if you are unhappy with the appeal results or your case is especially complicated, filing a lawsuit might be your best option.
Hiring Legal Representation
Insurance companies have a legal obligation to operate in good faith. They are required to investigate a claim fairly and promptly. However, insurance companies are for-profit, so sometimes they deny claims to try to earn more money. If you believe this is your case, you may be entitled to damages.
An experienced attorney can tell you if the insurance company denied your claim in bad faith and can help you file a bad-faith lawsuit. Bad faith lawsuits include disability insurance, accident benefits, or fire loss claims.
Filing a lawsuit is no small task. An experienced attorney will walk you through your rights and entitlements and will take care of confusing and time-consuming paperwork for you.