Was Your Insurance Claim Denied?

Why Was Your Insurance Claim Denied?

There are times when an insurer may think it is entitled to deny coverage. Typical reasons include late notice on the part of the policyholder; a claim or occurrence that took place outside of the policy period; in the case of a general liability policy, the determination that there was no “bodily injury,” “property damage” or “personal or advertising injury;” circumstances of the claim that trigger one or more of the policy’s exclusions; or the indication that the policyholder breached a condition of the policy. In many cases, an insurer may examine a particular loss and determine that it was not the type of loss the policy was intended to cover.

Insurance Claim Denied? Your Insurance Company Has To Tell You Why!

Regardless of the reason your insurance claim was denied, if an insurer intends to deny coverage, it is obligated to explain why. Because an adverse coverage decision can be extremely costly to an insured, the laws of most states afford some protection to policyholders, while also respecting the insurer’s right to avoid paying fraudulent claims or losses that legitimately are not covered by its policies. In Illinois, for example, an insurance company can agree to defend the insured while reserving the right to deny the claim if facts are later proven that make the claim not covered. Alternatively, the insurance company can bring a declaratory judgment lawsuit, in which the insurer asks the court to declare that, in light of the facts alleged in the complaint and under the terms of the policy, the insurer does not have to defend the insured. If the insurance company fails to follow either of these routes, it will be prevented (“estopped,” as the courts say) from relying on any defense to coverage it may have.

What are the lessons for policyholders? Insured today pay a lot of money for their insurance policies. If your insurance company denies coverage, or your insurer takes what seems like an eternity to make a decision about your claim, you should consult your broker and Public Loss Adjusters. Most brokers have claims departments that can be very helpful in resolving coverage problems, especially if they are based on a misunderstanding of the documents or the facts. If, however, your broker has difficulty persuading the insurance company to change its position or act more quickly, then you should have Public Loss Adjusters review the situation and help you determine whether it makes sense to challenge the insurer, seek a compromise or abandon your claim. Let us help you find out why your insurance claim was denied and what you can do about it!