Why Did My Insurance Company Deny My Claim?

By Brandon McWherter | October 20, 2016

Why Did My Insurance Company Deny My Claim?Imagine for a moment that a storm touches down in Tennessee and ravages your neighborhood. You put in a claim with your insurance company for the damage you sustained, dotting every “i” and crossing every “t.” Then the insurance company sends you some mail, and instead of the check you hoped for, you see a letter telling you that your claim was denied.

It happens to Tennessee homeowners all the time. We wanted to take a quick look at some of the more common reasons why an insurance company might deny a policyholder’s claim:

  1. That damage isn’t covered. We have discussed policy exclusions before, and they remain one of the most common reasons why insurers deny claims. It is vitally important that you check your policy to ensure that any gaps or exclusions are covered by additional riders or policies. But remember, the insurance company bears the burden of proving the application of an exclusion.
  2. The damage was too extensive. Every policy has limits. If the damage exceeded what your policy limits would cover, you’re likely to be “on the hook” for any additional damage over and above the limits. But, some policies provide extra coverage under limited circumstances. For example, many policies provide for an extra 20% of coverage if the existing limits are insufficient to make repairs.
  3. There is a disagreement over the value of your loss. In this case, perhaps your claim was accepted, but the offer seems incredibly low: you say your damage was worth “X,” and the adjuster says it was worth “Y.” Under these circumstances, the insurance company has an obligation to pay what they admit they owe, but sometimes they will try to apply pressure to get you to sign a release. Don’t fall for it – insurance carriers must pay what they owe and leave the rest to fight about later.
  4. There was another issue that could have led to the damage. If there is any kind of pre-existing damage or problem with your home, and the damage on your claim could have been caused by that pre-existing damage, your insurer may deny payment. The “wear and tear” exclusion is being utilized more and more to deny valid claims. These claims can be highly technical, and sometimes there can be coverage even if “wear and tear” or deterioration contributed to the damage.
  5. There was an error on your original application. Even the smallest mistake can lead an insurance company to deny a claim. They may try to deny the claim if you failed to disclose a prior loss, criminal history, etc. The interaction between you and your agent on these topics can be critical.

Bad faith actions

There are also times when an insurance company’s denial of a claim is just flat out and plainly wrong. If the insurance company is “lowballing” you on purpose in order to avoid paying out a larger (more accurate) amount, or is purposely arguing for the application of an exclusion that is not applicable, you might have a claim for bad faith.

At the Gilbert Firm, we work hard on behalf of policyholders whose insurance agents and companies are giving them the run-around. Clint Scott, Brandon McWherter and Jonathan Bobbitt are skilled Tennessee insurance disputes attorneys who know what it takes to successfully prove bad faith. To make an appointment at one of our offices serving Nashville, Chattanooga, Memphis, Jackson and Knoxville, please call 731-664-1340, or fill out our contact form.

 

Posted in Insurance Disputes