What to Do If Claim is Denied

Why Claims Get Denied

Insurance claim denials are more common than you might think. Understanding why claims are denied helps you prevent issues and fight back when denials are unjustified.

Common Reasons for Denial

Coverage Issues

Policy lapsed or wasn't in effect

• Payment was late
• Policy canceled before accident
• Coverage effective date after accident

Excluded driver

• Unlisted driver in household
• Driver specifically excluded
• Permissive use dispute

Excluded incident

• Intentional acts
• Racing or speed contests
• Commercial use (personal policy)
• Wear and tear vs. accident damage

Fault Disputes

They claim you were at fault

• Despite your belief otherwise
• Shared fault assessment
• Witness statements differ from yours

Liability not established

• Word vs. word situation
• No police report
• Insufficient evidence

Process Violations

Late reporting

• Exceeded policy notice requirement
• "Unreasonable" delay claimed

Missed deadlines

• Didn't respond to information requests
• Failed to submit required documents

Material misrepresentation

• Information provided conflicts with investigation
• Application information was inaccurate

How to Respond to a Denial

Step 1: Get It in Writing

Request and obtain:

• Written denial letter
• Specific reasons for denial
• Policy language supporting denial
• Information about appeal rights
• Deadline for appeal

Step 2: Review Your Policy

Read your policy carefully:

• Find sections related to denial reasons
• Understand coverage terms and conditions
• Look for exceptions to exclusions
• Note your duties after loss

Step 3: Gather Evidence

Collect documentation to support your appeal:

• Photos and videos from scene
• Police report
• Witness statements
• Medical records
• Repair estimates
• Any documents supporting your position

Step 4: Write an Appeal Letter

Your appeal should include:

• Policy number and claim number
• Date of accident and denial
• Why you disagree with denial
• Evidence supporting your position
• Request for reconsideration
• Specific outcome you're requesting

Appeal Letter Template

RE: Appeal of Claim Denial Policy Number: [Your policy number] Claim Number: [Claim number] Date of Loss: [Accident date]

Dear [Adjuster/Claims Manager]:

I am writing to formally appeal the denial of my claim dated [denial date]. The denial stated [reason given]. I disagree with this determination for the following reasons:

[State your specific reasons with evidence citations]

Attached please find documentation supporting my appeal, including:

• [List each document]

Based on this information, I request that you reconsider and approve my claim. Please respond within [15-30 days] with your decision.

Sincerely, [Your name] [Your contact information]

Fighting Specific Denial Types

"Policy Not in Effect"

Check for:

• Grace period provisions
• Payment dates and timestamps
• Reinstatement options
• Proof of payment

Action: Provide bank statements, payment confirmations, or policy documents showing active coverage.

"Driver Not Covered"

Check for:

• Permissive use coverage
• Definition of "household member"
• Whether driver was specifically excluded

Action: Argue permissive use if you gave permission, or challenge household member definition.

"Excluded Activity"

Check for:

• Specific exclusion language
• Whether activity fits exclusion
• Ambiguous policy language

Action: Argue the activity doesn't match exclusion definition, or that ambiguous language should favor coverage.

"Late Notice"

Check for:

• Actual notice deadline in policy
• Whether delay was "reasonable"
• Whether insurer was prejudiced

Action: Explain why delay occurred, show insurer wasn't harmed by delay, cite case law requiring prejudice.

"Material Misrepresentation"

Check for:

• What statement they claim was false
• Whether you actually made that statement
• Whether the "misrepresentation" was material

Action: Challenge that you made the statement, that it was material, or provide correct information.

Escalation Options

If your appeal is denied:

Supervisor Review

• Ask for manager review
• Request new adjuster
• Explain dissatisfaction clearly
• Document all communications

State Insurance Department

File a formal complaint:

• Most states have online complaint portals
• Free to file
• Requires insurer to respond
• May trigger investigation

What to include:

• Policy and claim information
• Timeline of events
• Copies of denial and appeal
• Your contact information

Insurance Department of Your State

Appraisal Process

For disputes over claim value (not coverage):

• Invoke appraisal clause in policy
• Each side hires appraiser
• Appraisers select umpire
• Majority rules

Mediation

Some states require or offer:

• Neutral third party
• Non-binding typically
• Less formal than court
• May resolve disputes quickly

Attorney Consultation

Consider hiring a lawyer when:

• Claim value is significant ($10,000+)
• Injuries are involved
• Bad faith is apparent
• Policy language is complex
• You've exhausted other options

Small Claims Court

For smaller disputes:

• No attorney needed
• File in your county
• Pay filing fee ($30-75)
• Present your case to judge
• Limits vary by state ($5,000-$25,000)

Full Lawsuit

For larger claims:

• Attorney recommended
• Court costs involved
• May recover attorney fees if bad faith
• Takes longer but more potential recovery

Bad Faith Claims

When insurers deny claims without valid reason, you may have a "bad faith" claim.

Signs of Bad Faith

• Denying claims without investigation
• Ignoring evidence you provide
• Misrepresenting policy language
• Unreasonable delays
• Lowball offers without justification
• Refusing to explain denials

Bad Faith Remedies

If you prove bad faith:

• Original claim amount
• Consequential damages
• Emotional distress damages
• Punitive damages (some states)
• Attorney fees

Preventing Future Denials

At Policy Purchase

• Read your policy (at least key sections)
• Ask about exclusions
• Disclose all drivers and household members
• Maintain continuous coverage

After an Accident

• Report promptly
• Document everything
• Cooperate with investigation
• Respond to all requests quickly
• Keep copies of everything
• Don't sign releases prematurely

Key Takeaways

• Request written denial with specific reasons
• Review your policy to understand their basis
• Gather evidence to support your appeal
• Submit formal written appeal with documentation
• Escalate to state insurance department if needed
• Consider attorney for large claims or bad faith
• Many denials can be overturned with persistence