Purchasing insurance is not enough to protect your investment against peril. Insurance claim denials are very standard in the industry. Denials are how insurers protect themselves against having to pay out claims.
Not all denials are valid. One thing you should keep in mind about insurance is that it is a for-profit industry. It is in the insurer’s best interest to deny as many claims as possible. Here are some common reasons for insurance claim denials.
Missing the filing deadline
Time is of the essence when it comes to filing insurance claims. Review your policy to ensure you know the deadline for claim submissions. Failure to file or provide claim information within a certain time frame usually results in a denial. Some insurers may offer exceptions, but they are rare.
Filing a claim for an exclusion/noncovered event
Homeowners insurance is not a one-size-fits-all solution. Insurers require their policyholders to purchase or include riders and add-ons to their policies to protect their properties from events that could compromise it, such as flood, wind, hail, theft, etc. If you file a claim for a noncovered event, your insurer will deny it. For example, if you file a claim for fire damage, but you do not have coverage for it in your policy, you may end up with out-of-pocket expenses for the repairs. You can avoid this by assessing your policy in its entirety to ensure that it contains the coverage options you need.
Assuming the cost of damages exceeds the deductible
A common issue that many homeowners are unaware of involves their deductibles. Insurers often deny claims when the amount of property damage does not exceed the amount of the deductible. One way to avoid this issue is to review your coverage and deductibles frequently and get a professional estimate on damages first.