8 Reasons for a Property Insurance Claim Denial
Dealing with a property insurance claim is difficult enough on its own. When you unexpectedly receive a claim denial from your insurance company, the recovery process can be even more insurmountable. While every situation is unique, there are several common reasons why insurance companies tend to deny property insurance claims. Learning these reasons could help you understand your rights and options for moving forward, as well as spot insurance bad faith.
It is important to understand the limits and parameters of your homeowners or commercial insurance policy before filing a claim. Your policy may exclude certain types of damage or events. For example, the average homeowner’s insurance policy in Arizona does not include flood insurance. Read the language of your policy carefully before you file so that you can be prepared for any denials based on exclusions.
Lapse in Coverage
If you failed to pay even one month’s worth of premiums, an insurance company could have the right to deny your property insurance claim. Failing to make all of your payments on time is risky, as this can make your coverage lapse and give the insurance provider a valid reason to deny your property damage claim. If the insurer did not warn you or give you a grace period before ending your coverage, however, you may be able to fight this type of denial.
Most homeowners insurance companies have strict claims filing deadlines. While this deadline will depend on the company and your policy, the average deadline is 180 days to 1 year from the date of damage. You typically must call your insurance company to report the incident or event much sooner, however – often within 24 to 72 hours.
Failure to Mitigate Property Damage
When a covered event such as a storm or fire damages your property, an insurance policy requires you to take steps to mitigate your losses. This means to protect your property from further or subsequent damage. If a storm puts a hole in your roof, for example, you are responsible for patching the roof to prevent water damage. If you fail to mitigate your losses, the insurance company may deny your claim.
One of the most common mistakes made during the insurance claims process is leaving out information or failing to completely fill out all of the required forms to file the claim. If you have insufficient documentation of the property damage or proof of your losses, for example, this could hold up your claim or result in a denial. Incomplete records can also interfere with your property damage claim. An insurance lawyer can help you gather information and documentation to support your property insurance claim.
Lack of Due Property Maintenance or Care
Your insurance claim may be denied based on the allegation that you failed to properly maintain or care for your home or business and that this contributed to the damage being claimed. If an outdated water heater sprung a leak, for example, the insurance company may not pay for related water damage if a plumber had previously recommended that you replace the appliance.
Bad Faith Claim Denials
There are many valid and acceptable reasons for an insurance company to deny your property damage claim. However, there are also illegal or unfair reasons that an insurer may try to use to take advantage of you. These are known as wrongful claim denials and are a sign of insurance bad faith. A wrongful claim denial may be the outcome of the insurance company’s failure to properly investigate your claim or a misinterpretation of the policy’s provisions. If you receive no explanation at all for the denial, this is also a sign of insurance bad faith. If you suspect a wrongful claim denial, contact an attorney right away to discuss your rights. You may be able to appeal the denial.