Can an insurance company refuse to pay a claim? In many cases, big insurers refuse to pay out completely valid claims due to administrative errors or what the company thinks.
It can be extremely frustrating for accident victims to take but the good news is that you can fight back and win.
If you cannot win it alone, get an experienced accident lawyer who knows what to do when the insurance company refuses to pay your valid claim. Mere changes can be all it takes for an insurance company to refuse to pay your claim. For example, an Ontario man, Modasir Ayobi faced insurance complications for modifying his vehicle.
Can an insurance company refuse to pay a claim?
An insurance company can refuse to pay a claim. In some instances, they simply refuse to pay a claim without investigating it. In other cases, they dispute the validity of your claim, arguing that the factors responsible for the accident are not covered by the policy.
For instance, an insurance company may claim that although your home walls have structural damage, a tornado is not the cause of the problem. The insurer is simply stating that your policy covers tornado damage only.
You can challenge your insurance company’s refusal to pay your claims. You may be able to sue the insurer for bad faith. Your chance of winning increases if you involve an insurance lawyer.
Why does an insurance company refuse to pay my claims?
- Your mistake. If you submit a claim containing incorrect information, or that does not comply with submission requirements, the insurance company can use it to deny payments. Make sure to pay attention to your documentation, who needs to receive the claim, and the time limits to make a claim.
- False or exaggerated claim. The insurance company will refuse to pay your claim if they think it is false or exaggerated. They may accuse you of trying to defraud them, and if you are guilty, you may face criminal or civil charges.
- The insurance company may hide the fact that your policy excludes certain types of injuries or accidents using fine print. Thus, they may deny paying your claims based on vague technicalities you were not aware of when you bought the insurance.
- Not seeking immediate treatment. If you are injured in an accident, seek medical treatment immediately. When you wait a week or any longer to seek medical treatment, your insurance company can cite the delay as a reason not to pay your claim. The insurance company will argue that you were not hurt because you did not seek immediate treatment.
- Expired or lapsed coverage. If you forgot to extend your coverage, the insurance company cannot help. When purchasing insurance coverage, read the fine print thoroughly to know if the coverage renews automatically or what you need to renew it yourself.
- Bad faith denial. Your insurance company may refuse to pay your claim out of bad faith, and then offer you justifications and insurance jargon to cover up. The insurance company is merely trying to hide the fact they are not going to pay your claims. If your insurance company is acting in bad faith, contact an attorney immediately.
- Failure to inform your insurance company. Your insurance company should be one of your first calls after an accident. Do not wait for a week or any longer to report the accident. Otherwise, the insurer will have an excuse for not investigating the incident and refusing to pay your claim.
What to do If your claim is denied because of a filing or administrative error?
An insurance company can refuse to pay a claim due to an administrative error. If you believe the insurer made a mistake denying your valid claim, do not file a lawsuit immediately. You can work out this problem with your insurance company to have your claim settled.
First, thoroughly review the denial letter from the insurance company. Understand why the insurance company denied your claim to better address their concerns. It could be that you forgot to send in evidence or sign a claim form.
The insurance company may make an administrative error like entering the wrong insurance number or service date or misspelling your name. Mistakes such as these can be fixed so that the insurer pays your claim.
If you are denied by a healthcare company, the medical provider may have entered your injury under the wrong code. Ask the medical provider to correct the mistake before you forward the updated file to the insurance company.
Steps to take if a claim is rejected or denied by the insurance company
Understand your reasons to appeal
First, understand why you should appeal. Go through the emails or letters you received from your insurance company to see the reason behind your claim denial.
Find out if the letters refer to a provision or paragraph in your insurance policy that explains the denial. For example, if you denied a healthcare claim, the insurance company sends an explanation of benefits (EOB) that explains the reasons they cannot pay your claim.
Find out if your insurer needs more information. In auto insurance, for instance, an insurance company may require a doctor’s report stating that you cannot work before they pay your wage loss. You may also be required to complete an application for benefits to receive an auto insurance payout for auto-related health costs.
An insurance company may code their reasons for the denial. If the information does not help you understand the codes, call them to explain it.
Back up your claim with significant evidence. In the case of an auto insurance claim, you could need a copy of the police report, scene photos and witness statements about the accident.
In healthcare claims, you need hospital admittance reports, copies of any medical prescriptions, referrals from your doctor regarding special treatment, or any medical record.
For homeowner’s policies, keep records and receipts about your possessions, especially the expensive ones. Have a video record of your home stored safely. You need the video recording to prove your case if the insurance company disputes your claim.
Complete the paperwork accurately
You may have to fill out forms or write letters during the appeal process. Ensure to use the correct claim number and your insurance ID number. Refer to your insurer’s website for appeals forms.
An insurance company may reply faster when you use the company’s paperwork instead of writing a letter yourself. Ask the insurance company for a guide and required paperwork if you are not sure how to appeal.
Organize your paperwork
A typical insurance company handles hundreds of claims daily, and they have systems set up for paperwork. They can track your original claim and any appeals, so ensure to mirror this process and organize your files in one place for easier access.
You need copies of emails the insurance company sent to you. You can also make notes about phone conversations.
Know the name and the job title of the insurance representative you speak with, the date, and the representative’s recommendations. Request a call reference number for the next time you call the insurance company so that they can pull your profile.
Do not get angry at the insurance adjuster
When your claim payout is denied, and you have medical bills or auto repairs or piling up, you would feel frustrated and angry. Do not yell at the insurance adjuster but it does not also mean that the adjuster will work for the best of your interest.
Phone representatives at insurance companies are accustomed to yelling customers. Not treating them with courtesy and respect does not help to get your claim paid. The kinder you act, the more you are about to strangely scare the insurance.
Follow up the appeal
Be consistent in following up with the insurance company. Your insurance company could be counting on your getting frustrated and dropping your appeal, so follow up and document the entire process.
You also have to be persistent to inform the insurance company that you are not letting go of your valid claims unless you are paid.
Small claims court and mediation
If your claim amount is reasonably small, depending on your state, go to the small claims court. You may not need a lawyer to seek resolution. During the mediation process, a neutral third party hears your story and the insurer’s story to make a decision.
Hire an attorney
If your appeal for a valid claim is unsuccessful, increase the pressure on the insurer. Take your appeal to a state insurance regulator or hire an experienced attorney. Experienced attorneys are a nightmare to insurance companies, they also understand what it takes to win your case.
An insurance company will go all the miles to increase its profits. The presence of an attorney threatens their objective. A lawyer will give the insurer the required documents to fairly evaluate your claim and set a payment deadline.
Your attorney will file a lawsuit if they believe it will make the insurance company compensate you. An attorney will present a valid case to get the insurance company to make a settlement in your favor. Make sure to file the lawsuit within the period required in your state.
If you win the case against your insurer, this guide will hellp you negotiate your payout fairly.
Do I file a claim with my insurance or the other party’s?
File a claim with your insurance company after an accident. However, the settlement amount or whether your insurance company has to pay the claims depends on your degree of fault and whether you live in a no-fault state or a fault state.
In a fault state, the driver judged to be less responsible for the accident recovers insurance payout from the at-fault driver’s policy. Make sure to always exchange contact and insurance information with the other party after an accident.
Get paid your claim with an attorney
If you want to sue your insurance company for denying your claim, hire a local experienced insurance attorney to defend your interests.
In addition to the headache of your uncooperative insurance company, you have to deal with the events responsible for your claim. Moreover, your insurance company has its team of experienced lawyers ready to do what the insurer wants – refusing your claim and telling your story how it suits their excuses.