Insurance is not a small ticket item on your list of personal or business expenses. Whether it be insurance for your car, your business or even your own personal life policy, it’s important always to know exactly what is and is not covered. What could be worse than finding out that you have been paying on a policy for years only to learn that a claim that has been made against it has been denied? There could be a multitude of reason as to why an insurance company would reject a claim. From a technical or clerical reason to something potentially criminal such as fraud, let’s explore the more common reasons insurance companies deny claims.
I am sorry sir, but you are not covered for that.
Picture it. You have a successful business selling attractive, designer watches online. Business is really booming and then you find out your website was hacked resulting in all of your clients’ credit card information being stolen. Now your clients are getting ready to sue you for their losses associated with the breach. Surely your business insurance will cover this, right? Unless you have a specific policy regarding cyber insurance, it may not. Business owners operate everyday under the perceived notion that a general liability policy is a catch all should anything go wrong. In the same vein, landlords often believe their personal homeowner’s policy will cover claims that are a result of behavior on the part of the tenants. The fact of the matter is that in both instances, the perceived notion is often incorrect. It is important to make sure your insurance agent fully understands all the facets of your business and has made sure you have all the correct coverage in place.
Deadlines, people! Deadlines!
Like many things in life, most insurance policies come with deadlines. By deadlines I mean a window of time by which claims can be made. The window is usually a certain block of time from the date of the incident to a date in the future when the claim can no longer be filed. Ultimately, time is of the essence. For larger or more complex claims that require conversations with witnesses or research, it is important for insurance investigators to start their process while the details are still fresh in everyone’s mind. For the simple ease of collecting necessary paperwork, it is always easier to locate recent information than having to hunt for old. The important takeaway to this point is not to dilly-dally. When it looks like you need to make a claim, do it right away!
Telling lies. Sweet little, (or big), little lies.
The insurance company looked your claim over and decided things just didn’t add up. Based on information or lack of information they have reason to believe the details do not warrant a legitimate payout from a policy.
A scratch, not spinal surgery.
Let’s pretend you were driving your car and a dog ran out in front of you. To not hit the dog, you swerve and drive up on the curb; knock over your neighbor’s mailbox and slightly scratching the corner of your front bumper. The neighbor later makes a claim that your small incident in fact destroyed 50% of their landscaping and 25% of the stucco on her home, all of which now needs to be repaired/replaced to the tune of $175,000. Obviously, the small scratch on your bumper and no significant injury to the rest of your car or your person would seem to discredit such an outlandish claim. Claim rejected!
Well, that’s not what I saw! And other eye witness contradictions.
Assume the same scenario as above. You hit the mailbox and the neighbor claims serious destruction to their yard and house. However, there happened to be a group of joggers running down the street when the whole event happened whose account of the dog/mailbox debacle paints a much different picture than what the homeowner was claiming.
What a coincidence!
The purchase a gorgeous piece of expensive jewelry simultaneously with an insurance policy to cover its value in the event of theft end up being “stolen” 3 days later. That seems, well, a little too coincidental. By the same token so does the purchase of a large insurance policy being taken out on a wife by her husband only to have the wife die under suspicious circumstances not long after the policy has gone into effect. Insurance is to protect people and property from unforeseen acts. Not fund “get rich quick” schemes.
When all else is failing…
Insurance companies do their due diligence before paying out. Let’ s look at the example from above. A claim for the theft of an expensive piece of jewelry has been made. The insurance company does some digging and finds out that during the same time frame as the claim, the person making the claim has declared bankruptcy, had a lien placed on their home, maxed their credit cards and owes back child support. Coincidence? The insurance company may not believe so.
What to do to make sure your claims are not denied.
- Be clear: Know exactly what is in your insurance policies. Know your limits. Know what kind of insurance you have and most importantly what you need. A good insurance agent is a key to this. Make sure you have an insurance agent who really knows you and your business. Their familiarity with you is just as important as their familiarity with insurance products. They can’t put the two together if they don’t know you and what is going on in your life and business. Find an agent who takes the time to build a relationship with you. An agent who makes it a point to check in with you periodically is essential to making sure you have all the coverage you need as well as navigating any potential claims process.
- Be timely: When an incident has occurred that requires a claim, don’t delay in filling out the required paperwork and gathering information.
- Be meticulous: If ever there was a time to dot I’s and cross t’s its when gathering up information on a claim. Be concise. Take copious notes and be organized with your documentation.
- Be honest: Dishonesty regarding insurance claims in not only a bad idea, it could land you in jail! Tell the truth and only make an insurance claim if it is legitimate.
If your claim is denied.
- Re-state your case: You can always gather up new information and present it to the insurance company for their reconsideration. Insurance companies will generally consider well thought out arguments or points that are relevant to their decision making.
- Talk to an attorney: While “lawyering up” may seem like the nuclear option, don’t discount it. Lawyers with experience in insurance companies and settlements know the layout of the land. They are often better able to maneuver you through the claims process if traditional means seem to be failing you. If a lot of money is at stake, take the time to talk to an attorney and learn what realistically your options are.
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