Common Reasons Insurance Claims Are Denied
Most insurance claims are handled without issue. Unfortunately, some claims – often catastrophic losses – are denied in whole or in part, leaving the policyholder with a significant financial burden. Whether it is a loss to your business or your home, an aggressive insurance recovery lawyer can help if your claim has been denied.
Late-Reported Claims
Most insurance policies require the insured to notify their insurance carrier of their loss on a timely basis, and consequently, delays in reporting a loss to your insurance company can lead them to deny the claim. It is important to note that policies do not typically state a specific deadline to file your claim. Unfortunately, this is often used against policyholders when the insurance company decides that you should have reported the claim immediately.
In some late-reported claims, the insurance company may issue a “reservation of rights” letter. While better than a denial, the reservation of rights letter basically communicates that the insurer will investigate the claim and may even assist with certain aspects of it, but are not yet agreeing to cover the claim, either in whole or in part.
Whether your claim was denied on the basis of late reporting or the insurance company issued a reservation of rights letter, be aware that you can fight this denial, but representation by a skilled and experienced insurance recovery attorney is typically required for recovery under this scenario.
Non-Payment of Premiums
Your insurance policy is a contract: in exchange for coverage, you agree to pay your insurance premiums. As a result, your insurance company is not obligated to provide coverage if you fail to pay your premiums, even if the failure to pay was an accident. As a result, we recommend that you vigilantly monitor your payments to make sure you remain current on your premiums. That said, mistakes can and do happen. An insurance recovery lawyer may be able to help if your claim was denied due to an inadvertent non-payment.
Inadequate Documentation
We cannot overemphasize how important it is to thoroughly document your claim. You should compile extensive documentation that demonstrates the cause of the damage, the extent of the damage, costs you have incurred so far, and the estimated cost to restore your property to its original condition.
The insurance company won’t accept or make full payment on your claim without documentary proof. And while the insurer will send out an adjuster to survey the damage, keep in mind that the adjuster works for the insurance company and is therefore incentivized to find reasons to deny or underpay your claim. Therefore, we encourage property owners to document their claims as thoroughly as possible in order to establish their own independent proof. If you are unsure of how to best document your claim, an insurance recovery lawyer can provide guidance.
False or Inaccurate Statements
You should never knowingly misrepresent any element of your claim to your insurance company. Lying to your insurance company will almost certainly result in a denial of your claim, cancellation of your policy, and maybe even criminal charges.
Inaccurate statements may be a greater danger because a policyholder can inadvertently make mistakes. Property owners are often in a financial or emotional crisis following a significant loss and are overwhelmed with trying to figure out what to do next. In this stressful situation, it is easy to make mistakes or overlook inaccuracies in information or estimates provided to you. Unfortunately, your insurance company will scrutinize everything you say or submit. Even if you unintentionally provide erroneous information, the carrier may accuse you of making a false statement and deny your claim. Contact an insurance recovery lawyer as soon as possible if your insurance company has accused you of inadvertently making a false statement based on an inaccuracy.
Coverage Limitations and Exclusions
Most property owners purchase insurance coverage and then never think about it again. They are often unaware of exactly what is and what is not covered in the event of a loss. Unfortunately, the specific coverage purchased may be limited and there may be exclusionary clauses that apply in the event of specific losses. For example, earthquake damage may not be covered, mold coverage may be limited, or the coverage limits on your personal property or business personal property losses may not be adequate to cover all of your possessions. Flood coverage, earthquake coverage, and sewer backup coverage must usually be purchased separately in addition to your basic property coverage. If you are unsure what is covered by your policy, we recommend that you contact your insurance agent to discuss whether you need to purchase additional coverage.
Property owners should be aware that insurance companies will sometimes wrongfully limit or deny your claim based on a particular exclusion or limitation in your policy. It is often difficult to determine if a particular coverage exclusion or limitation is applicable. If your insurance company denies your claim based on a policy limitation or exclusion, reach out to an experienced insurance recovery lawyer for help.
Failure to Prevent Further Damage
Property owners have an obligation under their insurance policy to make a reasonable effort to prevent further damage. If you fail to do so, your insurance company may deny all or part of your claim.
The effort a property owner is expected to take to prevent further damage depends on the type of loss. For example, you are not required to risk your life to put out a fire in your home. Following a flood, however, you are expected to take prompt action to prevent further water damage or mold growth. As a result, if your property is exposed to the elements or likely to sustain further damage, you should contact a remediation company as soon as possible.
Denials based on failure to prevent further damage are often related to the property owner’s failure to promptly report the claim. The best thing to do is to notify your insurance company immediately following the loss and ask them what steps you need to take to protect your property. They typically will provide you with a list of remediation companies whose services will be covered by your insurance policy without your needing to pay for the service out of pocket and later seek reimbursement.
If Your Claim Has Been Denied, Contact Pearson Legal, P.C. Today
For most property owners, a claim denial creates a financial crisis. At Pearson Legal, we help our clients get the coverage they paid for. If your claim has been denied, contact us today to schedule a free consultation. The sooner you contact us, the sooner we can help you get your business back on track or rebuild your life.