Some people assume that because they have an insurance policy, they are completely covered. However if something bad does happen and you are forced to claim on the insurance policy, the insurance company can refuse your claim if you haven’t adhered to your obligations and processed the claim properly.
Understanding the reasons why your insurance company might decide to reject your claim helps you be better prepared and get the best outcome for you and your family. A number of the reasons why your claim may be rejected are usually in the fine print of the insurance policy. While it is time consuming and difficult to read through the entire policy sometimes, it’s still a good idea if the coverage is important to you.
Below are some of the most common reasons why your claim may be rejected by an insurance company!
If you haven’t been honest with your insurance company in any way, they could accuse you of “false representation”. The size of the lie will determine the fate of your insurance policy claim. If it is a substantial issue they might cancel your policy and deny your claim, leaving you with nothing! An example of this would be making a claim on your health insurance but fabricating medical bills to obtain financial advantage. Another example would be claiming unemployment insurance while you still have some cash in hand work on the side. If your insurer discovered your false representation in relation to your employment status they would cancel your policy and even worse, they might sue you for any money already received!
Another leading cause for policy claims being rejected is that the event wasn’t covered by the policy. There are exclusions with every policy and it is up to you to discover what the exclusions are. Sometimes the exclusions are in the fine print so you should take care to discover them all. An example would be a home insurance policy that covers for water damage from a flood, but not from gutters backing up. If the insurance company claims that the water damage occurred because of improper drainage instead of the actual flood, they might not pay you.
In some circumstances you need to prove liability to claim. Car insurance often has a requirement that you have to determine who is at fault before they will pay the insurance. If another party damages your car in an accident and you file a claim against their insurer, that insurer will try to determine who was at fault. If they determine you were, they will not pay you.
There is also a statute of limitations for many laws and that affects insurance pay outs and your ability to claim damages. Insurance statute are different in every state and in every country, so to avoid this you should claim on your insurance as early as possible.