When you buy an insurance policy, it’s not always a guarantee that the insurer will pay the benefits. You may be aware of the many insurance scams that exist, which is perhaps the main reason why insurance companies are extremely keen on procedures followed before paying claims. It may also explain why they have tough insurance adjusters and attorneys.
However, a good insurance provider will always be committed to honoring their word in paying a justified claim. They’ll also show empathy, go the extra mile to walk with you when you need them the most, and offer the best customer support. But then again, you still have all these different cases where insurance claims have been denied and most probably, you’re asking the same question that millions of people ask every day, “why”?
In this piece, we’ll be shedding more light on why most people’s insurance claims get denied and how to avoid being one of them.
Non-Disclosure or Sharing Irrelevant Information
Insurance policies are contracts signed between the policyholder and insurance company based on trust. This means that the insurance company will rely on the information provided by the policyholders and in return, they make a pact to pay the sum insured. Failure to disclose vital information such as pre-existing medical conditions, smoking habits, criminal offenses, or pre-existing damages could be valid grounds for an insurance company to refute your claims.
To avoid this, it’s important to provide all the relevant information when getting your policy as well as when pursuing your claim. Ideally, this means providing the right answers to the questions asked. Christopher Carling from Kerley Schaffer LLP law firm in Oakland, California says that this is among the many common denials that you’ll want to avoid in a personal injury case. There’s also a lot that insurance companies won’t tell you, especially the tricks they use to minimize payouts and maximize their profits. Some will store the information provided by policyholders and use it to look for ways to deny the claim. It’s for this reason that you also need to be extremely cautious about what you reveal or disclose. To help you out, below are some tips to use when disclosing information to insurance companies:
- Do not disclose what you don’t know
- Do not share information that could reduce the insurer’s risk
- Avoid common knowledge questions
Exclusions and Omissions
Insurance companies often provide an outline of the circumstances under which policyholders or their beneficiaries may and may not receive their benefits. However, some of them can be notorious enough to omit important clauses regarding exclusions, and this could advertently see them deny certain claims. For instance, in life insurance policies, most insurance companies would exclude death while scuba diving, deaths from suicide committed within the first year, and deaths due to intoxication or drug overdose. Also called exclusions, such omissions could easily be the cause your beneficiaries’ benefits are denied upon your unfortunate demise. Other examples of omissions include:
- Aviation exclusion
- Acts of war
- Participating in dangerous activities or sports
- Death between a contestable period
- Participating in illegal activities
- Misstatement of age
To avoid your claim being denied as a result of exclusions and omissions in your policy contract, it’s imperative that before signing on the dotted line, you carefully read and understand the fine print. Preferably, it would be wise to have your attorney or financial advisor help you before signing a life insurance contract. Additionally, right at the beginning, you’ll also need to disclose information about your inclinations, employment, and whether you’re a thrill-seeker. Remember, any false move could jeopardize you or your beneficiaries (in case of life and health insurance) from benefiting your life insurance claim.
Failure to keep up with your policy premiums – lapse
After signing the insurance contract, the insurance company will hold it to you to adhere to the terms of the policy. This means paying your insurance premiums on time. Unfortunately, you may develop memory problems over time or have your employment terminated. This could see your policy canceled. In layman’s terms, an insurance policy will lapse if you fail to keep up with policy payments, meaning that the policy contract will cease to exist. This is a valid reason for an insurance company to deny your claim.
You may set reminders to remind you to pay your premiums on time or alternatively, have your premiums deducted from your checking account at the agreed time.
It’s a heartfelt concern when someone denies a claim. While it’s not the wish of most insurance companies to deny their client’s insurance claims, there are still situations that warrant it to happen. The above are but a few ways why most insurance claims get denied and how to avoid getting caught up in such scenarios. So before it gets to a point where you have to contest a claim denial, always seek legal counsel first to ensure that you understand your rights.