Your insurance can deny your claim for multiple reasons, from insufficient coverage to suspected fraud. While they may have a justifiable reason for the denial, it can leave you in a frustrating spot in your time of need.
If you need to file a claim, educate yourself on the reasons that claims occasionally get denied to stay informed and understand what your rights are as a policyholder.
Reason 1: Policy Terms
Every insurance policy is a contract between the insurance carrier and the policyholder. When you sign your policy contract, you agree to certain terms and conditions that are set by the insurance company. These include ways that the company would act in the event of a claim.
Here are a few vocabulary words to be aware of in your insurance policy:
A limit is the maximum amount that your insurance agrees to pay for a covered claim. There are individual limits for each coverage listed on your policy, including home, liability, auto, etc.
Example: You have a liability-only auto policy for your 2018 Nissan Rogue. The limit listed on your policy for property damage liability is $15,000. If you cause an accident with another vehicle, that is the extent that your insurance carrier will pay for damages done to the other vehicle. If these limits are insufficient for the cost of the damage, you could be responsible for the remaining cost.
An exclusion is something that your insurance policy will not cover. Your policy will list exclusions explicitly and specifically.
Example: Due to extreme amounts of rain in the spring, your area experiences a flash flood, and your basement is flooded. A common exclusion in homeowners’ policies is flooding from outside sources, so your damage may not be covered.
A condition is a rule that the policyholder must comply with in order to get coverage.
Example: Your insurance agrees to pay for a claim with a listed peril (an event that causes a claim) if you pay your premium. One month, you can’t pay your premium, and as a result, your coverage lapses. If during that month you have a loss, it wouldn’t be covered because you didn’t follow the conditions listed on your policy.
If you have insufficient limits, specific exclusions, or conditions that you did not follow, your claim might get denied. For this reason, be sure to meet regularly with an agent to review the information on your policy and ask questions.
Reason 2: Missing or Insufficient Information
Another reason that claims get denied is missing or insufficient information. In most policies, the insurance company requires you to provide proof of what happened and comply with their investigation of the event. If you are not providing the requested documentation (or not answering the phone), they will probably deny your claim.
Here are some examples of documentation that your insurance might ask for:
- Police report
- Photos of your property
- Videos of the incident
- Witness information
- Medical bills
- Inventory of belongings
Example: A thief breaks into your home and steals multiple belongings from you while you are on vacation. When you get home, you file a claim with your insurance. They ask you to compile a list of the items that were stolen and submit it within a year. You forget about this instruction, and after a couple years, you finally get around to submitting a list. Since your insurance hasn’t heard from you within the requested time frame, the claim is denied.
You can easily avoid denials like this. When you file a claim, comply with your insurance’s investigation of the claim and provide the documentation they ask for in a timely manner.
Reason 3: Suspected Fraud or Misrepresentation
Fraud is an increasing risk in the insurance industry, so insurance is always on the lookout for suspicious activity. If insurers believe your information to be inconsistent or misleading, they may have grounds to deny your claim.
Example: Your neck was injured in a car accident several years ago. You got rear-ended by another vehicle yesterday, and it exacerbated the injury. When you call to file a claim with the other driver’s insurance, you fail to tell them that you already had an injured neck that you have been treating. When conducting their investigation, the insurance company discovers this, and they deny coverage of your injury because they believe you misled them in your report.
The key is to stick to the facts when you are filing a claim. Only report what you know to be true.
Reason 4: Denial of Liability
As in the previous example, there are times you may need to file a claim on another person’s insurance because they caused your accident to occur. If that is the case, their insurance would be on the hook for your damage.
That’s not all, however. Just as you need to provide proof of your own losses, other insurance companies need proof that their insured is at fault for your damage. If the other insurance doesn’t think your proof is sufficient to put their insured at fault, they will deny the claim.
Example: You are an early-morning delivery driver, and you are delivering packages to a snowy neighborhood. As you leave the property, you slip on the snowy sidewalk and injure your elbow. You file a claim on that homeowner’s insurance because you believe your injury was their fault; in your eyes, they did not take care of the snow on their property, which made conditions hazardous for you.
However, the claim is denied because it was actively snowing, and the homeowner put salt on the sidewalk last night. The insurance company does not think their insured was at fault for an event that they reasonably tried to prevent.
While this may seem unfair, remember that you can file a claim with your own insurance if the other party’s insurance does not accept liability. If your insurance carrier agrees that you are not at fault, they can pursue further action on your behalf.
Frequently Asked Questions
Do I have to file a claim if I got in an accident? Not necessarily. You need to exchange insurance and driver information with the other party, but you don’t have to file a claim.
Can I change my limits or coverage after a claim has already been filed? Yes, but the change will not apply to the claim that’s open on your policy since you can’t backdate coverage. The limits that are applied to the claim would be whatever was listed at the time of the claim event.
Will an auto claim be denied if the driver is not on my policy? Possibly. Talk to your agent about your coverage today and add all drivers in your household as soon as possible.
If my policy was cancelled, will my claim get denied? Possibly. It depends on whether the date of the loss happened during the in-force policy period or after the cancellation.
Final Takeaway
Your insurance carrier provides protection when life throws something unexpected at you. However, there are circumstances where they could deny your claim if it is not covered or proven appropriately. If you need to file a claim, gather necessary proof of the loss, follow your insurance’s requested timelines, and stick to the facts.
If you need to file a claim with us, you can file online or call our 24-hour claims line at (888) 432-4527.
Disclaimer: The information included here is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts.
