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When Insurance Denies A Claim?

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You’ve received a coverage denial letter in the mail after an auto insurance claim; so why has the auto insurance company done this and how can you make sure it doesn’t happen to you when you come to claim on your car insurance?

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What Should You Do If the Auto Insurance Denied Your Claim?

You’ve received a coverage denial letter in the mail after an auto insurance claim; so why has the auto insurance company done this and how can you make sure it doesn’t happen to you when you come to claim on your car insurance?

Firstly, your car insurance company will issue a letter of denial if they complete their claim investigation and determine there is no basis for paying the claim.

The most common reasons for issuing a denial of claim typically include; the claim is covered by a policy exclusion; non-payment of premiums has lapsed the policy coverage; failure to disclose material information when applying for insurance coverage; and equally serious, a fraudulent claim.

By far, the most common basis for denial is because the claim is covered by an exclusion clause in the policy. You can help yourself by making sure you are aware of what your policy excludes before you take the coverage out.

This is where comparing auto insurance policies is a handy skill to have and by no means is it an easy one to acquire. Nevertheless, once you have the policy in force you need to be able to find your way around the policy conditions and exclusions so you minimize the risk that an incident will not be covered.

More serious reasons for denial of coverage are misrepresentation and fraud. Misrepresentation of facts on your insurance application will invalidate the policy and you will not be covered; at best all you’ll be entitled to is a refund of your premiums and at worst, liability for the damage caused which may run into tens of thousands or more.

Fraud is very serious, as it is frequently a criminal offence as well as having insurance coverage implications. Claiming for an in-car DVD system when you simply had a basic radio, adding items not in the car when it was stolen or inflating the value of your vehicle above what it was really worth are good examples of insurance fraud. In fact, most insurance fraud is easily spotted but the ramifications are dire;

When you discuss the claim with the insurance investigator, never say anything you are not sure of. If you are asked to provide an immediate answer to an investigator’s questions simply advise them that you cannot be completely accurate and you will answer when you can be as accurate as is possible.

Never sign anything you do not understand; this is good advice for several reasons not least that an insurance company will be looking to minimize the claim’s dollar amount (as it directly reduces their profits) and limit any potential liability from the accident or claim, for instance, you have an accident however you only develop health issues related to the wreck several months later.

If you signed a waiver, you have no basis to go back to re-open the claim and you will not be covered.

Always ask for questions and queries to be dealt with in writing so you create a record of what has been discussed and any mutual understanding just in case you have to go to court; remember you will have the burden of proof in proving your claim but the insurance company will have the burden of proof to show they have denied your claim properly.

Never admit liability or that anything that occurred was your fault. In most cases, this nullifies your coverage!

Why Home Insurance Companies Deny Roof Claims

In the past few years homeowner’s insurance customers have been fighting a growing battle with insurance companies over roof claims. The trend has been an increasing number of roof claims that are being denied by the insurance carriers. Roof claims are usually the most common and most costly home loss an insurance company will face beyond a total fire loss or liability claim. Depending on the state in which you live the likelihood of your roof being damaged by weather can vary dramatically. A state like Oklahoma which is prone to hail and wind will have much more occurrences of roof damage than a state like Arizona. Why are insurance companies denying roof claims and how can you make sure your roof will be covered?

First you have to understand what a home insurance policy covers and what is excluded. Not all policies are the same but there are similarities that are shared among the major carriers. Your home policy will state what is excluded but rarely will state what is covered. This is because the company doesn’t want to list every possible scenario rather listing the situations that are not covered and leave the rest to assume it is covered. A roof can be damaged by a number of factors including but not limited to wind, hail, sun, failing objects, and snow. Not all of these occurrences are covered like sun damage which is generally a wear and tear issue over many years.

There are many reasons why an insurance company will deny a roof claim including:

  • Roof damage appears to be from wear and tear
  • Lack of maintenance
  • Not enough damage or damage is covered by roof warranty
  • Fraudulent claim
  • Damage is caused by an excluded loss

There are other reasons why your claim may be denied which are seldom talked about. The adjuster’s experience has a lot to do with how well they can determine what created the damage. Most adjuster’s go through training but years of experience will always provide better results. When you file the claim can also have an impact on how the claim will be handled.

If the hail storm occurred six months ago it could be difficult for an adjuster to determine what the actual cause of the damage was from. Usually in large storms the initial adjuster on scene is from another state and will not likely be there if a claim is filed months after. When you have an adjuster come out who is unfamiliar with the path of the storm your claim could be denied.

In some situations insurance companies are acting only in the best case of the company which can lead to improper claim adjusting. There are reported cases of management giving bonuses to adjusters who only approve a certain percentage of claims and cases where people have been fired for accepting too many claims. If you feel your claim is not handled properly then hiring legal counsel may be your best move but I am not here to provide legal advice.

Don’t Let Your Insurance Company Deny Your Claim

Everyone has heard the horror stories: An evil travel insurance company denies the claim of another decent individual. Here is a recent example: An 80 year old man went on a cruise and accumulated $107,000 in medical bills after he fell sick with pneumonia which led to complications. The insurance company denied his claim. (As you probably guessed, lawyers eventually got involved). Several stories like this have many people believing that insurance companies NEVER pay claims. So the question is: Is travel insurance just a big scam? The short answer is no, but there are definitely things you need to know to help avoid becoming another tragic story.

First off, travel insurance is generally a good type of insurance to buy. “Good insurance” means paying a reasonable upfront premium to transfer a large financial risk from yourself to an insurance company. By contrast, extended warranty on your iPod can be considered “bad insurance” because the premiums are expensive and a broken iPod, although annoying, will probably not ruin you financially. Since medical costs are extremely expensive (i.e. the average hospital stay in Canada costs $7000 a day) travel insurance is a smart way to protect yourself from the potentially crippling costs of a medical emergency.

Of course that all depends on the insurance company actually paying a claim when the time comes. Claim payout rates in the insurance industry are highly guarded, but there is some anecdotal information available. In a recent article by the Chicago Tribune, the US Travel Insurance Association indicated that approximately one in six policyholders file a claim, and fewer than 10 percent of those claims are denied.1 According to Canadian insurance broker Travel Insurance Office Inc, approximately 9% of travellers have a claim, and less than 7% of those claims are denied.2

So it looks like there is at least some evidence of insurance companies paying out claims. But how can you make sure an insurance company will pay YOUR claim, without getting expensive lawyers involved?

One way to protect yourself is to actually think like a lawyer when buying travel insurance. No, you don’t need a law degree from Harvard, but you do have to understand that an insurance policy is a legal contract. If there is a claim, the insurance company is going to go back that contract, which includes your insurance policy and any applications or questionnaires you completed.

In the insurance world, claims are very black or white, yes or no, covered or not covered. With that in mind, here are some tips to help keep that dreaded “denied” stamp in the insurance company’s holster:

Read the policy: Contrary to popular belief, not everyone who works for an insurance company is evil. When a claim is denied, some insurance insiders sincerely wonder: “Didn’t they read the policy?” Many claims are denied because the policy specifically excludes the item in a section appropriately called “Exclusions.” Other denials are due to claims that are simply not covered by the policy, or the amount claimed is less than the policy’s deductible. The lesson? Read and understand the policy before you buy.

Answer the medical questions truthfully and fully: Unfortunately, many medical questionnaires are often long and confusing. To fill out the questionnaire fully and accurately, you may need to consult your doctor, pharmacist, or a relative who knows more about your medical history. Don’t leave your travel insurance to the last minute. The majority of claim denials are a result of people rushing through the questionnaire, or not inquiring about items they were unsure of. One insurance agent remembers asking his client, “Do you have high blood pressure?” The client’s answer, “No. The three medications I take keep it normal.” Remember, how you define terms is irrelevant, it’s the language in your insurance contract that counts.

Pre-existing conditions: Many plans cover pre-existing conditions that are stable and controlled. However, you need to read how “stable and controlled” is defined in your policy contract. For example, a condition will not be considered “stable” if you changed your medication in any way recently. Speak to the insurance company directly if you have questions. Non-disclosure of medical information can void your coverage even if the non-disclosed conditions or symptoms have nothing to do with the conditions causing your claim. In the example above involving the man on the cruise, the insurance company denied the claim because he failed to disclose a previous heart condition in his application.

Advise the insurer of any medical changes prior to leaving: If you’ve already purchased your travel coverage and your health changes in any way before the date the policy goes into effect, you must notify your insurer. A health change in the interim might invalidate your coverage.

If you do get denied, fight it: There are no guarantees in life, and even the most carefully completed policy application can result in a claim denial. Regardless of the reason, don’t accept the denial without a fight. The insurance company owes you a clear explanation, and make sure to get it in writing. Specifically ask for the a detailed explanation of why the claim was denied, which parts of the contract were supposedly contravened, and how you can launch an appeal. If all else fails, a lawyer may have to get involved to argue your case.

Travel insurance is definitely worth getting, and the evidence seems to show that insurance companies do pay out in time of need. However, applying for travel insurance does take some effort. Following these tips will at least lessen the chances of getting a dreaded claim denial.

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