Denied Insurance Claims: Steps to Take When Your Claim is Not Paid

Let’s start with this most basic premise:  insurance companies do not make their money by paying claims.  Instead, they make money by collecting premiums.  Because of this, often insurance carriers will underpay or even deny otherwise valid claims.  Dealing with a denied insurance claim can be frustrating and overwhelming; however, policyholders should be aware that there are steps they can take during the claims process and after a denial to navigate this challenging situation. This blog post will discuss important considerations and actions to take when filing your insurance claim and if the claim is not paid.

During the Claims Process:

File Your Claim Promptly

As an initial matter, it is crucial to file your claim promptly. The sooner you report the loss to your insurance company, the quicker the investigation and resolution can begin. Failure to promptly file a claim may complicate the process or result in a denial.  Most insurance policies include a provision requiring you to file your claim as soon as possible and preserve evidence of the losses you suffered and/or damage to your property.

Prepare for Questions

Next, when filing a claim, be prepared for the insurance carrier to ask questions regarding the loss.  Sometimes this is done in a recorded statement over the phone, and other times, if the claim is more complex, the insurance carrier may ask for an “Examination Under Oath” or “EUO” which is similar to a deposition in litigation.  When faced with an informal interview or EUO, answer their inquiries honestly and provide complete information to the best of your knowledge. Clear communication and cooperation can help facilitate a fair evaluation of your claim, but more importantly, policyholders must cooperate with the insurance carrier during the claim investigation!   Don’t give the insurance carrier an “out” to deny coverage by failing to cooperate.

Maintain Detailed Records

This includes police reports, repair estimates, medical bills, and any other relevant records. These records will serve as evidence to support your claim and demonstrate the extent of the damages or losses incurred.  Further, these details/records may be crucial if the claim remains [improperly] denied and you need to file a lawsuit.

After the Denial of Coverage:

Thoroughly Review Your Policy

When faced with a denied claim, you should thoroughly review the reasons given by the insurance carrier and take the time to compare that to your actual insurance policy.  It is not unusual, especially in an initial denial, for the insurance carrier to rely on general provisions of the policy that might have been changed by endorsements or limited by other parts of the policy.  During your review, pay close attention to the coverage details, exclusions, and the process for filing a claim. Understanding your policy will help you assess whether the denial is valid or if there are grounds for further action.  If you have questions, ask your broker or an experienced attorney.

Persistence Pays Off

If your claim is denied, do not lose hope. Reach out to the insurance company to understand the reason for the denial. Seek clarification on any concerns or doubts you may have. If you remain unsatisfied with the response, you may have the option to appeal the decision. Be persistent in pursuing a resolution.  I have seen numerous situations where an initial denial or underpayment of a claim is eventually reversed when the policyholder is persistent and can demonstrate valid reasons why the claim should be covered.  Most importantly, don’t give up without a fight; that is precisely what the insurance company wants you to do!

Seek Legal Assistance

When facing challenges in getting your claim paid, seeking legal advice from an attorney who specializes in insurance claims can be beneficial.  Insurance policies are complex, and often, even the people within the insurance company reviewing the policy don’t fully understand the nuances and details within their insurance policy!  An attorney can help you navigate the complex language, reference and explain the applicable caselaw, help you understand your rights and options, represent your interests during negotiations with the insurer, and, if necessary (and as a last resort), file a lawsuit to enforce the coverage under the policy. 

Conclusion

Policyholders should not be deterred from pursuing their rightful coverage when facing a denied insurance claim. By carefully reviewing their policy, promptly filing a claim, maintaining detailed records, and seeking assistance when needed, policyholders can improve their chances of successfully resolving the situation. Remember, persistence and understanding your rights are key when navigating the complexities of denied insurance claims.

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