What to do When an Insurance Claim is Denied
Companies purchase insurance to help manage many of the risks inherent in their business. Accidents and lawsuits can be costly, and an effective insurance program can help cover these costs. That said, not all types of losses fall within the scope of insurance policies. Claims can sometimes be denied even when businesses believe they should be covered. If you file a claim and the carrier issues a denial or issues a “reservation of rights” letter, you should discuss this with your insurance advisor and review your options. Sometimes initial denials can be reversed based on additional information or a different reading of policy language. Other times, there may be policies you can purchase to cover such claims in the future. Below are the steps to consider when an insurance claim is denied.
- Review Carrier’s Explanation: Insurance carriers are required to explain their reasons for coverage denial. Carefully review the explanation for their denial or reservation of rights to determine the specific reasons for the refusal or potential refusal of coverage. Common reasons for coverage denials can include policy exclusions, failure to provide timely notice, or losses that fall outside the scope of the insuring agreements in the policy.
- Gather and Provide Information: If you believe the carrier is making a determination based on a misunderstanding of the information you’ve provided or if there’s additional evidence that would support an argument for coverage, gather this information and work with your insurance advisor to provide it to the carrier. Include any evidence that was not included in the initial claim notice and provide a written explanation of how the additional evidence would support coverage. Your insurance broker can be your advocate in this process and can help you prepare information to present to the carrier.
- Explore Legal Options: If your insurance carrier continues to deny a claim after you appeal the decision, you should determine whether you are satisfied that the carrier is acting in good faith and has given fair consideration to your appeals. There may be steps you can take to prevent such situations in the future. That said, insurance policies are enforceable legal contracts. If you believe the insurance carrier is not acting in good faith or is not appropriately reviewing the facts and arguments in favor of coverage, you can consult with a coverage attorney to evaluate your options.
RBN CAN HELP
To ensure a claim is likely to be covered by an insurance policy, businesses should work with a qualified insurance advisor that understands their business and their unique risks. Additionally, an insurance advisor can make sure company ownership and management understand what their insurance policies cover and, in the event of a claim, can help advocate for coverage with insurance providers.