After being injured in a bad accident, you will probably be reliant on the liable party’s insurance company to pay for your resulting damages. Medical bills, in particular, can add up quickly, putting you in a financial bind unless an insurance company steps in and pays up. The same is true if your property is damaged in a storm or some other unexpected disaster. You will need your own insurance provider to honor your policy and provide financial support.
What happens if your claim is denied, though? What does that really mean?
When an insurance claim is denied, the responding insurance company is refusing to pay for the requested damages at that time. It is not a final word that cannot be changed, though. With some convincing or further investigation, an insurance company can reverse its denial and pay some or all of the damages noted in the claim. This insurance concept is essentially the same in all types of filings from auto insurance claims to homeowners’ insurance claims.
Why Would Your Claim Be Denied?
Being told that your claim was denied is one thing but learning why it was denied is something else altogether. To get to the truth behind your claim denial, you need to understand the explanation given by the responding insurance company, be it your own provider or someone else’s.
Some of the most common reasons for insurance claim denials are:
- Liability disputes: Whenever liability for an accident or property damage is unclear, you can be certain that any responding insurance companies will deny your claim. At the least, they will deny your claim and offer a reduced amount after stating that your liability is higher than first calculated.
- Policy exclusions: You will be hard-pressed to find an insurance policy that covers every possible disaster, damage, and injury. If the issue at hand is not covered, then the insurer can deny your claim. For example, your homeowners’ insurance policy might include coverage for water damage caused by natural flooding but not by plumbing breaks.
- Unpaid premiums: You need to pay your monthly premiums routinely and punctually. Otherwise, there could be a lapse of policy coverage, starting on the day of your first missed payment.
- Delayed notification: It is important to report an accident or disaster damage to your insurance company as soon as possible. Waiting too long to communicate what happened can make an insurer suspicious about your claim’s authenticity, resulting in them denying your claim out of an abundance of caution.
Insurance Bad Faith & Wrongful Denials
There is also the real possibility that an insurance company will not give you any reason as to why it denied your claim, even though they are contractually obligated to do so. When an insurer doesn’t want to give you a reason for your denied claim – or the reason they give is illogical – then you will have encountered insurance bad faith.
How can insurance bad faith occur?
- Claim is denied without any valid reason
- Policy coverage is misrepresented when sold to the policyholder
- Inadequate, lowball settlement amount is offered intentionally
- Insurer does not investigate your claim for further details
- Insurance company ignores your communications or responds deliberately slowly
Insurance companies have a fiduciary duty to their policyholders to always do what is right and within the boundaries of both the law and an agreed-upon insurance contract. The fiduciary duty also requires insurers to offer fair insurance policies, not one-sided contracts that inordinately benefit themselves. Essentially, any insurance company action or tactic that breaches this fiduciary duty can be insurance bad faith, but it most commonly occurs as a wrongful claim denial.
Appealing or Suing After a Denial
As mentioned, when an insurance company denies your claim, for valid or invalid reasons, it is not the end of your claim. You have the opportunity to file an appeal that challenges the denial. It is highly advised that you work with an insurance claims attorney to manage your appeal, so you do not overlook any important details. You might only have 30 days to appeal in some situations, making it all the more useful to team up with a lawyer.
If attempts to appeal and settle the situation fail, then your next course of legal action will be filing a lawsuit against that insurance company. Insurers hate going to the courtroom where the case is made public, so do not be surprised if the insurance company in question asks to renegotiate a settlement once your attorney files a lawsuit. Of course, if your case really must go to trial for a conclusion, then it will be up to a judge or potentially a jury to decide whether it was right or wrong to deny your claim.
Do you need help challenging a denied claim in Tulsa, Oklahoma? Aizenman Law Group is the legal team you can trust. Our attorneys and staff are well-versed in personal injury and insurance claim cases, capable of handling matters through settlements or litigation. Call (918) 215-8856 to learn more.