What to Do When Your Insurance Claim is Denied
Dealing with a denied insurance claim can be incredibly stressful. You've paid your premiums, and now that you need your insurance, the company has rejected your claim. It's important to understand that a denial isn't necessarily the end of the road. You have rights, and there are steps you can take to challenge the decision. This guide provides a comprehensive overview of what to do when your insurance claim is denied.
1. Understand the Reasons for Denial
The first and most crucial step is to understand why your claim was denied. The insurance company is legally obligated to provide you with a written explanation outlining the specific reasons for the denial. This explanation should be clear and detailed, not just a vague statement.
Request a Written Explanation: If you haven't already received a written explanation, request one immediately. This document is essential for understanding the basis of the denial and building your case for appeal.
Identify the Specific Clause or Exclusion: The denial letter should reference specific clauses or exclusions in your insurance policy that the company is relying on. Pay close attention to these references, as they are the key to understanding the denial.
Common Reasons for Denial:
Exclusions: Most insurance policies contain exclusions, which are specific situations or events that are not covered. For example, a home insurance policy might exclude damage caused by floods if you haven't purchased separate flood insurance.
Non-Disclosure: If you failed to disclose relevant information when you applied for the insurance policy, the company may deny your claim. This could include pre-existing medical conditions, previous claims, or modifications to your home.
Policy Lapses: If you haven't paid your premiums on time, your policy may have lapsed, meaning it's no longer in effect.
Insufficient Evidence: The insurance company may claim that you haven't provided enough evidence to support your claim. This could include medical reports, police reports, repair quotes, or other documentation.
Disagreement on Value: The insurer may agree that the event is covered but disagree with the amount you are claiming. This often happens with property damage claims where the insurer believes the repair costs are too high.
Breach of Policy Conditions: Insurance policies often have conditions that you must meet, such as taking reasonable steps to prevent loss or damage. If you breach these conditions, your claim may be denied. For example, failing to maintain your property adequately could lead to a denial.
2. Review Your Policy Carefully
Once you understand the reasons for the denial, the next step is to thoroughly review your insurance policy. Don't rely solely on the insurance company's interpretation. Read the entire policy document carefully, paying close attention to the following:
Definitions: Understand the definitions of key terms used in the policy. The meaning of a term in the policy may be different from its everyday meaning.
Coverage Provisions: Review the sections of the policy that describe what is covered. Make sure you understand the scope of the coverage and any limitations.
Exclusions: Pay close attention to the exclusions, as these are the most common reasons for claim denials. Determine whether the exclusion cited by the insurance company actually applies to your situation.
Conditions: Review the conditions of the policy, which outline your responsibilities as the insured. Make sure you have complied with all of these conditions.
Claims Process: Familiarise yourself with the claims process outlined in the policy. This will help you understand the steps you need to take to appeal the denial.
Understanding Policy Jargon
Insurance policies can be filled with complex legal jargon. If you're unsure about the meaning of a particular term or clause, don't hesitate to seek clarification. You can contact the insurance company directly or consult with a legal professional. Learn more about Claimslawyer and how we can assist with understanding your policy.
3. Gather Additional Evidence
If you believe the insurance company's denial is unjustified, you'll need to gather additional evidence to support your claim. The type of evidence you'll need will depend on the nature of your claim and the reasons for the denial.
Medical Reports: If your claim involves a medical condition, obtain detailed medical reports from your doctor or specialist. These reports should clearly document your diagnosis, treatment, and prognosis.
Police Reports: If your claim involves a crime, such as theft or vandalism, obtain a copy of the police report.
Repair Quotes: If your claim involves property damage, obtain multiple repair quotes from reputable contractors. These quotes should be detailed and itemised.
Photographs and Videos: Take photographs and videos of the damage or loss. These can provide valuable visual evidence to support your claim.
Witness Statements: If there were any witnesses to the event, obtain written statements from them. These statements should be signed and dated.
Expert Opinions: In some cases, it may be necessary to obtain an expert opinion. For example, if your claim involves a complex engineering issue, you may need to consult with an engineer.
Organising Your Evidence
It's important to organise your evidence in a clear and logical manner. Create a file or folder for your claim and keep all relevant documents together. This will make it easier to present your case to the insurance company or the Australian Financial Complaints Authority (AFCA).
4. Lodge an Internal Complaint
Before escalating your complaint to an external body, you must first lodge an internal complaint with the insurance company. This gives the company an opportunity to review its decision and potentially resolve the issue without further action.
Follow the Company's Complaint Process: Most insurance companies have a formal complaint process. Follow the steps outlined on their website or in your policy document. This usually involves submitting a written complaint to a specific department or individual.
Clearly State Your Grievance: In your complaint, clearly state the reasons why you believe the denial was unjustified. Refer to specific clauses in your policy and provide any additional evidence you have gathered.
Set a Deadline: Give the insurance company a reasonable deadline to respond to your complaint. A common timeframe is 30 days.
Keep a Record: Keep a copy of your complaint and any correspondence with the insurance company. This will be important if you need to escalate your complaint to AFCA.
5. Escalate to the Australian Financial Complaints Authority (AFCA)
If you're not satisfied with the outcome of your internal complaint, or if the insurance company fails to respond within a reasonable timeframe, you can escalate your complaint to the Australian Financial Complaints Authority (AFCA). AFCA is an independent body that provides free and impartial dispute resolution services to consumers who have complaints about financial services providers, including insurance companies.
Eligibility: Before lodging a complaint with AFCA, make sure you are eligible. There are certain time limits and other requirements that you must meet. You generally need to have first attempted to resolve the issue directly with the insurance company.
Lodging a Complaint: You can lodge a complaint with AFCA online or by phone. You'll need to provide information about your insurance policy, the reasons for the denial, and the steps you've taken to resolve the issue. Frequently asked questions can help you understand the process.
AFCA's Process: AFCA will investigate your complaint and attempt to reach a resolution that is fair to both you and the insurance company. This may involve mediation, conciliation, or a formal determination. AFCA's decisions are binding on the insurance company, but you are not obligated to accept the outcome.
6. Consider Legal Action
If you're not satisfied with AFCA's decision, or if you believe your claim is particularly complex or involves a significant amount of money, you may want to consider taking legal action. This involves filing a lawsuit against the insurance company in court.
Consult with a Lawyer: Before taking legal action, it's essential to consult with a lawyer who specialises in insurance law. A lawyer can assess the merits of your case and advise you on the best course of action. They can also help you navigate the legal process and represent you in court.
Statute of Limitations: Be aware of the statute of limitations, which is the time limit within which you must file a lawsuit. If you miss the deadline, you may lose your right to sue. In Australia, the limitation period for insurance claims varies depending on the state or territory and the type of insurance policy.
- Cost and Risk: Legal action can be expensive and time-consuming. It's important to weigh the potential benefits against the costs and risks before deciding to sue. Your lawyer can help you assess the likely outcome of the case and the potential costs involved.
Navigating a denied insurance claim can be challenging, but it's important to remember that you have rights. By understanding the reasons for the denial, reviewing your policy carefully, gathering additional evidence, and following the appropriate dispute resolution processes, you can increase your chances of a successful outcome. If you need assistance with your insurance claim, our services at Claimslawyer are here to help.