What Happens When the Insurance Company Refuses to Pay Your Claim?
An insurance company does not exist to pay you as much money as possible; instead, its function is to preserve as much of the money as possible that you and other clients have paid in your monthly premiums and to avoid payouts at all costs.
Can an Insurance Company Refuse to Pay a Valid Claim?
Can an insurance company refuse to pay a valid claim? Insurance companies are businesses with boards and shareholders, and despite some convincing advertisements with talking animals and catchphrases, they are not really on your side.
This means that insurance policies will often look for reasons to “lowball” settlement figures on claims or not pay claims at all. Here are some of the most common reasons insurance companies refuse to pay valid claims:
- No Coverage: The particular claim is not covered by the policy, either specifically or due to a technicality.
- Expiration or Lapse of Coverage: The policy premium was not paid for the period when the damage or loss was incurred. Many policies do not automatically renew, and this is a common and expensive issue.
- Failure to Mitigate: A big reason for denial could be that you failed to repair the damage, leading down two tricky paths: the response that the harm suffered wasn’t bad enough to require treatment or repair, or your failure to treat or repair aggravated the problem.
- Mistakes in the Claim: The claim was submitted with incomplete or incorrect information, or certain requirements were not met, such as the number of estimates, before and after photos, or other documents.
- Fraud in the Claim: Fraud is similar to the mistakes above, except fraud alleges that you deliberately submitted false or exaggerated information with regard to the claim.
- Failure to Notify: Notice of the incident was not reported to the insurance company within a certain required timeframe.
- A Bad Faith Denial: Hopefully, you never experience bad faith practices, but some insurance companies will try to run circles around their insureds with jargon and justifications when all they want to do is not pay.
What to Do When Your Insurance Company Won’t Pay
Although the best course of action is always to work with a qualified insurance claims attorney like the lawyers at MMA Law Firm to help you deal with your insurance company, we also have curated some best practices tips on what to do when your insurance company won’t pay. We use these practices when our clients ask us, “Can an insurance company refuse to pay a claim,” and you should, too. When your insurance company won’t pay:
Don’t Take No for An Answer
While millions of insurance claims are unjustly denied every year, only a small fraction of policyholders question the denial. Contesting the insurance company’s decision improves your likelihood of success by leaps and bounds.
Carefully Review Your Policy
Since the insurance policy is a contract, this is a task best handled with lawyer assistance. But the bottom line is there may be a clause in your contract that the insurance company missed, misinterpreted, or shouldn’t be able to enforce due to fairness considerations.
Contact the Insurance Company
If you don’t receive word from the insurance company, you may have to take matters into your own hands, contact your agent, and then move up the corporate ladder until you receive an answer. Wherever possible, communications are best had in writing; if a phone call is the only way to get through, take detailed notes and follow up with writing confirming any progress that you made on the call.
Request a Written Explanation
In most states, insurance companies are required by law to provide written explanations of claim denials, and failure to do so is actually an illegal practice. Keep a detailed record of your correspondences back and forth with the insurance company, and include your policy number, copies of all relevant invoices, evidence of damage and other supporting documents, and a clear statement of the issue on all of your letters or emails.
Watch Out for Bad Faith
If the reasons for your denial seem like jargon or over-justification, they may be just that. Denial of coverage for these types of reasons, as well as failures to notify of changes to your policy or sudden new exclusions, can be a violation of state law.
Contact the Insurance Claim Lawyers at MMA
As legal professionals who help clients interpret policies, understand their rights, and recover from their losses every day, the lawyers at MMA Law Firm are ready to help clients negotiate with their insurance carriers.
Contact us online for more information.
This blog published by MMA Law Firm is available for informational purposes only and is not intended to be legal advice on any subject matter. The content available on this website may not constitute the most up-to-date legal or other information.