Two people discussing insurance policy

Insurance exists to protect you and your loved ones in the event of unforeseen circumstances. If you suffer unexpected damage to your home, homeowner’s insurance may compensate you. Or, if you’ve been involved in a car accident, your insurance can cover your vehicle damage and medical bills.

But what happens if your insurance claim gets denied by the insurance company? What recourse do you have to get the compensation you need?

Here’s a quick overview of what you should do following a denied claim for different types of insurance.

Auto insurance

The steps you take after being denied in your auto insurance claim will depend on why your claim was denied to begin with. Your insurance company should provide you with a reason alongside your denial, but if not, you’ll need to get that information so you can determine whether or not you have a legitimate path to disputing the denial and getting compensated for your losses.

There are a few common reasons why insurance companies might deny auto insurance claims:

  • Lapsed coverage due to failure to pay premiums in a timely manner

  • You made an uninsured motorist claim despite the other party in the accident having insurance

  • No coverage for the type of claim presented on your insurance policy

  • Not qualifying as a named insured party under the policy

  • Damage amounts exceeding policy limits on your declarations

  • Failure to add a new vehicle to your insurance policy in a timely manner

There are some circumstances in which an insurance company may deny your claim based on information that does not actually reflect what happened in your claim. In such a case, you can dispute the decision made by the insurance company.

You should first inform the company that there has been a mistake and offer the evidence you’ll need to support this. Upon receiving this settlement, the company should be willing to negotiate a settlement with you. You have certain legal rights under your insurance policy, and insurance companies are required to negotiate in good faith.

Other potential actions include appealing the decision to the State Insurance Commissioner, or, if the company is not willing to negotiate, to take legal action against the company with allegations of bad faith practices.

Life insurance

There are a few reasons why insurance companies may deny a life insurance claim:

  • The type of death wasn’t covered in the policy: This isn’t as frequent of an issue in today’s policies—the most widely used exclusion for type of death is suicide, but you may be able to negotiate a waiver of that exclusion so long as the death happened after the contestability period.

  • The death occurred during the contestability period: life insurance policies will usually have a clause called a “contestability period” allowing the insurer to investigate and contest the claim if the death occurs within a certain period after purchasing the policy. Usually this period will be two years. If the insurer finds you lied about something on the application (such as a known medical condition), the carrier may refuse the payout.

  • Failure to disclose information: You are responsible for being completely accurate and truthful in the information you disclose to your insurer. Simple errors like improper addresses may not be grounds for claim dismissal, but lying about medical conditions or certain risk factors might.

  • Failure to pay premiums: If the policyholder doesn’t pay premiums, then a claim will likely be denied.

As with auto insurance, you should contact your insurer to find out why you were denied a claim. If you have any reason to believe you were improperly denied, you should seek counsel from a life insurance lawyer in Louisiana to discuss the facts of your case and begin building a dispute.

Business interruption insurance

Business interruption insurance covers you in the event of an unexpected disaster that interrupts your business or forces its closure. It could be something like the coronavirus pandemic, or it could be a natural disaster that forces your doors shut.

The closure of your business will result in lost income for you and your employees, and also may pose additional expenses for necessary repairs after a disaster. Payouts from this form of insurance keep you and your employees afloat during these periods of interruption.

The most common reasons for claims denials in this category include:

  • An injury or damage not covered by the insurance policy

  • An untimely claim

  • Exceeding of coverage limits

  • Suspected fraud

The COVID-19 pandemic has led to some unprecedented scenarios for this type of insurance; if you have a business interruption policy, it is important you investigate your coverage and make sure you take full advantage to get your business the relief it needs.

For more information about the steps you should take if you are denied an insurance payout, contact local personal injury lawyer, Mark Artall, APLC.

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