What Are the Top Reasons for Insurance Denials?

Insurance claims can often turn into a complex and challenging process. Whether or not you are at fault for an accident, it is not uncommon for insurance companies to make it difficult for you to receive the compensation or benefits you rightfully deserve. While some claim denials are valid, others may not be. Understanding the primary reasons for insurance denials is crucial in identifying instances of insurance bad faith. In this article, we will delve into the top reasons why insurance claims get denied and offer insights on how to navigate through these situations effectively.

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Missed Deadline: A Race Against Time

One of the most prevalent reasons for insurance claim denials is the failure to meet specific deadlines imposed by insurance companies. There are various time limits involved in the claims process, such as filing the initial claim or submitting the Proof of Loss form. If any of these deadlines are missed, it can result in a claim denial. It is of utmost importance to familiarize yourself with the insurance company’s deadlines for claims and information submissions, as well as their policies regarding missed deadlines. To avoid this issue, it is advisable to submit your claim as soon as possible.

When an insurance claim is filed against your car insurance policy, you have duties under the contract to cooperate with the insurer’s investigation and evaluation of the claim. These claims may include a liability claim for a collision you may have caused as well as first party insurance claims. (First party claims include medpay, uninsured motorist and underinsured motorist coverage.) If you do not cooperate in a reasonable amount of time with requests fairly made within the terms of the policy, the insurance company may suspend your claim and send a reservation of rights letter. A reservation of rights letter informs the policyholder that the insurance company cannot cover the claim under your policy based upon the information it has. Under these circumstances, the insurer alleges it lacks sufficient information to determine coverage and evaluate the claim due to policyholder inaction.

It is not an act of insurance bad faith for the carrier to deny a claim that is outside of deadlines under the policy, past the statute of limitations, or if it reserved rights in good faith due to policyholder lack of cooperation.

Liability Dispute: Determining Fault and Responsibility

Even if you have provided all the necessary information within the given deadline, the insurance company may still deny your claim based on a liability dispute. After conducting an investigation, the insurance company might contest its policyholder’s liability for the damages and losses you have incurred. They may argue that someone else should be held accountable for the damages or assert that you were at fault for the losses. In cases of liability disputes, your claim could face complete denial. However, if the insurance company believes you also share responsibility for the injuries, they might still offer compensation, albeit in a reduced amount based on the concept of comparative negligence.

The insurance company has a duty to conduct a good faith investigation of the facts; however, it does not have to exhaustively investigate every potential theory or possible source of information. The insurer also has no duty to gather evidence to conclude the policyholder was not liable for the accident. Insurance companies often rely upon traffic accident reports, photos and recorded statements from the parties or witnesses involved to determine liability.

Lack of Medical Care: The Crucial Element

When it comes to insurance claims involving injuries, the provision of proper medical care is a critical aspect. Insurance companies thoroughly examine whether you sought medical attention, the time elapsed before your hospital visit, the official diagnosis you received, the recommended treatments from your doctor, your adherence to the prescribed treatment plan, and any follow-up care you received. Failure to follow through with treatments, the absence of a diagnosed injury, or delayed medical care are common issues that frequently lead to claim denials.

In a bodily injury claim, insurance companies look for every opportunity to attack the value of your claim based upon the timing and type of medical care received. To recover fair compensation for your injuries, it is vital that you promptly seek out medical care and follow the treatment plan prescribed by your doctor.

Pre-Existing Injuries: Guarding Your Medical History

It is essential to exercise caution when granting insurance claims adjusters access to your complete medical history. Insurers often employ this tactic to search for pre-existing injuries in your medical background. If you have a pre-existing injury, the insurance company may exploit it to deny coverage or reduce their settlement offer. Instead of signing a medical release waiver, it is advisable to obtain copies of only the relevant medical records and personally submit them to the insurance company. If you hire an accident attorney to represent you, your attorney will be responsible for obtaining your records and submitting them as part of a demand package in your case.

If you attempt to negotiate an insurance claim involving an injury on your own, the insurance company will offer to obtain your medical records to evaluate your claim. While it may save a little money, the insurance adjuster will ask you to sign a broad medical records release form. They will use this to get records from your accident-related treatment as well as explore your medical history. They will search out pre-existing medical conditions which may or may not have anything to do with your accident injuries. The insurer can also find unrelated facts that they can exploit to offer you less money or hurt your case at trial. Keep in mind, once the insurance company has those records, they will keep and use them to the extent legally allowed forever.

Lack of Coverage Available: Policy Limitations

Another common cause for insurance claim denials lies in the unavailability of coverage under the policy in question. If the type of coverage you are seeking is not included in the policy, the insurance company may reject your claim. For instance, if you request coverage from your own insurance provider after being involved in a hit-and-run car accident but lack uninsured/underinsured motorist insurance, your claim may be denied. Similarly, if your claim exceeds the maximum coverage provided by the policy, the insurance company might either deny the claim or reduce the coverage amount.

Challenging a Wrongful Denial: Seeking Legal Assistance

Encountering any obstacles while attempting to recover financial coverage from an insurance company may warrant a consultation with a personal injury attorney. An attorney possesses the necessary expertise to negotiate with insurance adjusters, especially concerning liability disputes or missed deadlines. Hiring an attorney becomes particularly crucial if you believe you have fallen victim to insurance bad faith.

Insurance bad faith occurs when an insurance company deliberately treats you dishonestly or unfairly. Many insurers resort to bad faith practices as a means to save money and benefit their investors. They may deny claims without valid reasons. If you suspect an insurance company of engaging in bad faith practices in handling your claim, seeking the guidance of a personal injury attorney in Denver or your respective location is recommended. An attorney may be able to pursue a separate claim of bad faith against the insurer on your behalf, potentially leading to additional compensation.

Get help from an experienced personal injury attorney

Insurance claim denials can be disheartening, but understanding the reasons behind them empowers policyholders to navigate the system more effectively. By being aware of the common causes of claim denials, such as missed deadlines, liability disputes, lack of medical care, pre-existing injuries, and coverage limitations, individuals can take proactive steps to strengthen their claims and seek the assistance of legal professionals when needed. Remember, knowledge is key in ensuring that you receive the compensation and benefits you deserve from your insurance company.

Our personal injury attorneys are experienced and passionate advocates for accident victims. We can help you recover fair compensation for your injuries, medical bills and other damages incurred due to an accident. We offer free consultations for accident cases across Colorado. Contact our law firm today to discuss your case with one of our attorneys.