Was Your Insurance Claim Denied? Here Are Four Steps You Can Take

You pay insurance premiums to make sure you’re protected when things go wrong.

However, if you do need to file a claim, your insurance company can, and may, deny it. There are some steps you can take next. But first, let’s take a look at the possible reasons why an insurance claim was denied.

Your Insurance Claim Was Denied — Why?

If you have run into a problem like this, you likely have questions. You paid your premiums on time and followed the steps for filing a claim. So, why didn’t it go through?

Eric Croak, CFP, is president at Croak Capital, a Toledo-based wealth management firm. He said insurance is a business. Denied claims are part of protecting a business’s bottom line. Here are some common reasons insurers turn down a claim.

Policy Breaches

“There are indeed times when insurance companies have valid reasons for denying claims,” Croak said. “This can happen if the policyholder breaches their policy terms or misunderstands the coverage they have purchased.”

If your insurance claim was denied, it’s important to take a close look at your policy terms. Is it possible you misunderstood the coverage? If not, highlight the areas where you’re clearly entitled to overage. Also, make sure you haven’t breached the terms of your insurance policy.

Incomplete Claims

In the stress of dealing with property damage or medical issues, you may file an incomplete claim. This could be something as simple as not submitting the required documentation to back up your claim.

“When policyholders withhold information needed to substantiate their claims, it makes insurers very wary,” Croak said. “Insurers may suspect that the policyholder is hiding something, such as a pre-existing condition, which could affect the claim.”

Claim Errors

You try to dot every “i” and cross every “t,” but errors can slip through. Those errors could be the reason your insurance claim was denied. As with incomplete claims, your insurer may see that as a red flag. This is especially true if it looks like you misrepresented the facts in your claim paperwork.

Delays in Filing

Did you wait a few weeks before filing your claim? That could be the reason you were denied. To boost your chances of getting your claim through, submit the information immediately after the incident, and make sure you have as much proof as possible the incident occurred.

“If you have property damage like a burst water pipe, take photos or videos of the damage immediately,” Croak said. “If you fix the pipe and wait a few weeks to file a claim without any visual evidence, the insurance company might question whether the incident even happened. So, remember: document everything meticulously.”

Health Care-Specific Issues

Health care insurance gets its own category for claim denials. Croak points out a few instances where your health care insurer may deny your claim:

• Your medical care exceeded your policy limits.
• Your insurer deems a treatment or procedure as “not medically necessary.”
• You didn’t receive pre-authorization before accepting treatment, despite your policy stating it’s required.
• You used a provider who isn’t within your coverage network.

Four Steps to Take Next

It isn’t the end of the road. Try these steps before you give up on the claim.

1. Contact the Insurer

Your first step after a denied claim is to reach out to the insurance company. You may find one call clears everything up. But Todd Stearn, founder and CEO of The Money Manual, advises taking a few minutes to prepare before making that phone call.

“Start by gathering your information, getting your thoughts in order and making notes and calling the insurance company, pen and paper in hand,” Stearn said. “You’ll want to be able to cite the wording in your policy that states that your situation should be covered. You may learn that the denial was due to an error of some sort and that you’ll be covered after all.”

Stearn also advises jotting down the name of the representative and the details of the conversation. If your claim is still denied, the next step is a written appeal.

2. Appeal in Writing

If a phone call fails, it’s time to draft a letter to your insurance company. Again, the more facts you can provide, the better. It’s important to keep emotion out of it and quote directly from the policy where applicable.

“Include copies of supporting documentation, such as medical records or home or car repair estimates,” Stearn said. “Keep copies of everything, including the letter you send, and note the date you mailed it.

3. Contact Your State Insurance Board

If, despite all your efforts, your insurer still denies your claim, Stearn advises reaching out to your state’s Department of Insurance. Each state has a form you can complete to file a complaint against an insurance company or agent.

“The National Association of Insurance Commissioners (NAIC) website has a handy state directory where you can quickly find your state insurance agency,” Stearn said.

4. Seek Legal Counsel

If your losses are high enough to make it worth it, an attorney could help you. Attorney Barry P. Goldberg, principal of Goldberg Injury Lawyers, suggests consulting a lawyer as soon as possible after the claim denial.

“Pick a lawyer who knows their way around insurance claims,” he said. “They’ll be able to spot any missteps and guide you on the best path forward. Be mindful of the costs and make sure it’s worth it for what you’re trying to recover.”

You may feel frustrated if your insurance claim was denied, but many insurers are open to discussing the situation. It’s important to do your research so you can makeyour case, whether you’re reaching out by phone or filing a written appeal. If you can present documentation, you’ll be more likely to have success.

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.