There are multiple reasons why an insurance company may deny a claim. The dynamics of the particular case can be very important in this determination, regardless of whether it is a personal injury claim, property damage claim, or a health insurance issue. All insurance companies are in business to generate profits, and many big-box companies even have extensive marketing campaigns designed to acquire new customers.
Sales agents may seem nice at the time of purchasing a policy of any type, but this can easily change when a claim is filed, and company claims adjusters begin looking for reasons to deny liability or reduce a claim value. Insurance policies are contracts that often contain micro wording, which is also done on purpose.
It is difficult to read because they do not want the purchaser to know the full details when claims are filed, and those details almost always favor the company’s authorization to deny a claim. This is why it is important to consult with an attorney immediately, even when considering a policy. Here are a few reasons that insurance companies use when refusing to pay a claim.
1. The company is not liable
The first and most common insurance denial reason is that the company is not responsible for paying benefits. This is typically a response in an auto accident case when comparative negligence percentages in the case indicate another driver was at fault other than their client. Liability actually rests with the respondent party, and their insurance provider is obligated to pay only when their client is at fault to a particular degree for causing the accident and any subsequent damages.
2. Any damages are the fault of the claimant
Personal fault is a common defense in many insurance claims. This is also a typical response when auto accident injury claims are filed, but it can be used in certain situations regarding a premises liability personal injury case. Comparative negligence can be an issue in any auto accident claim for a driver, but passengers rarely have any assessment for personal fault.
Property insurance claims can be denied for personal fault as well, but this usually is only an effective denial reason in private property injury claims. However, it can also be used against property owners who are filing property damage claims as well. No detail is too small for a claims adjuster to use if it will save the company money in a claim payout and potentially stand up in court when tested.
3. The claim was not filed on time
All insurance companies have a legal requirement to investigate a claim as soon as possible and deliver a decision on coverage in a timely fashion. This applies across all types of insurance claims. Clients also have to file claims within a certain window as well, and any delay in filing can give the claims adjusters an excuse to deny or reduce a claim value.
Many claims are denied at first, only to be paid later at a reduced rate when there is a chance the company claim denial could be upheld in a trial or court hearing. Additionally, the tiny print in a policy could also mandate that a case be handled in arbitration, which rarely bodes well for the claimant. There is a reason the insurance company demands this type of case adjudication as opposed to a trial or a mediation process, and it is because the system favors the company.
Of course, there are other reasons that insurance companies will attempt to use when not wanting to pay a claim. They commonly try to defer fault to parties other than their client in accident cases, and many companies will contest the amount of damages being claimed based on a lack of evidence or severity. They also commonly use a perceptive third-party expert when contesting any claim, and this can range from property damage cases to personal injuries.
The goal of the company is to save money on settlement payout totals, and this is most commonly accomplished by denying claims initially that they know they will eventually have to settle in some amount. This could also be proven as bad faith tactics in some cases when an aggressive and experienced insurance claim denial attorney can prove bad faith in a trial.
