After a car accident, you may expect that insurance will cover property damage. Without the benefit of insurance, medical expenses following a catastrophic event like a motorcycle crash or being hit while walking can be costly. In the unfortunate event that you or someone you know was injured on your property, it’s comforting to know that insurance will make up the losses. 

But what happens if your insurance claim is denied? To understand what to do after an insurance claim is denied, it’s helpful to think about what insurance is and how it works. Insurance is a contract designed to protect the insured from financial loss. Each policy of insurance is different, but the basic concept is the same. 

An insurance policy specifies that the company will pay for expenses from certain events and for particular damage. When an insurance claim is denied, the insurance company lets the claimant know that it has decided not to pay for the damages submitted in the claim. 

But that’s not the end. 

Common Reasons for Denied Claims

Insurance policies define what the policy will pay for, called covered perils, and what the policy will not pay for, called exclusions or limitations. In a homeowners’ insurance policy, covered perils might include theft, for example. When your insurance claim is denied, the insurance company should give you the reason for the denial. 

Covered Perils

If the insurance company determines that the claimed damage was not the result of a covered peril, they might deny the claim. Policy language can be complicated and tricky to interpret. A determination like this may be appealable under the terms of the insurance policy. 

Liability

Liability refers to who is responsible or at-fault for something. New York requires all automobile drivers to carry no-fault automobile insurance called Personal Injury Protection (PIP). PIP pays for certain expenses of drivers, passengers, and pedestrians hit by cars, regardless of who is at fault. 

For damages that exceed the PIP policy limits, liability insurance kicks in. When a driver is at fault, the driver’s liability insurance covers damages to other people or property caused by them. If there’s a question as to who is at fault for the damages, the insurance company might deny a claim on that basis. 

Deductibles

When a covered peril occurs, the insurance company is obligated to pay. Usually, the insurance policy includes a deductible, which is the amount of money the insured has to pay out-of-pocket toward the expenses. For a policy with a $500 deductible, claims for damages of less than $500 might be denied. 

Policy Exclusions

Most insurance policies include a list of events that are not covered: exclusions. Homeowners’ insurance often excludes flooding. Automobile insurance sometimes excludes car accident damages caused by a driver under the influence of drugs or alcohol. Sometimes, insured parties dispute the insurance company’s interpretation of policy exclusions. 

Other Reasons for Denied Claims

There are other reasons why your insurance claim may be denied. A claim is denied when a policy has lapsed. Your policy lapses if you fail to pay your premium. This commonly occurs when a person whose premiums are drafted automatically gets a new debit card number. 

Insurance claims can also be denied based on policy requirements. Many policies require an insured party to notify the insurance company within a certain time after a potential loss. Failure to notify the company of a loss may trigger a concern as to your claim’s validity. 

Bad Faith & Wrongful Denials

If the insurance company refuses to provide the reason for the denial, or if the reason they give doesn’t make any sense, they may be acting in bad faith.

Potential bad faith acts include:

  • Denying a claim without a sound reason
  • Misrepresenting coverage at the time the policy is sold
  • Offering unconscionably low settlement offers intentionally
  • Refusing to investigate claims 
  • Failing to respond to your communications or unreasonably delaying responses 

When your insurance claim is denied, you may feel like giving up. However, failure to pursue your claim could leave you stuck with a heavy financial burden. If an insurance company denies your claim, you have a few options. 

Appeal

Most, if not all, insurance policies include procedures for policyholders to appeal denials. While you don’t need an attorney to pursue an appeal, you may be more successful if you do have an attorney. 

Whether your case involves a slip-and-fall accident at the grocery store or you hit a bicyclist with your door, if you have been involved in a covered peril and suffered a loss, the responsible insurance company should pay your claim. If the insurance company denied your claim, you can contact a personal injury attorney who can help you understand your legal rights under the policy terms.