4 Steps to Handling an Insurance Claim Denial Letter
Insurance Bad Faith - March 27, 2020
When you have been injured, you should be able to count on an insurance carrier to uphold their end of an agreement. This means that the insurance carrier should follow the policy you both signed and agreed on. If you are injured due to the careless or negligent actions of another person, you should be able to count on their insurance carrier to pay for your medical bills, lost income, pain and suffering, and other damages.
Unfortunately, there are times when insurance carriers send a claim denial letter. It is important to understand what to do after a denial letter comes in the mail. This does not mean your fight is over.
1. Review the denial letter
The first step you need to take after receiving an insurance claim denial letter is to thoroughly review the document. You need to look at the language used in the denial as well as the language in the insurance policy. Look for any exclusions that could be hidden in the fine print of your policy. It could be possible that denial is based on a very specific policy exclusion. Understanding the reason for the denial will help you move forward in the right direction.
2. Dispute the denial
If it seems that the denial was ambiguous, contains false or misleading information, or is completely erroneous, you will want to dispute the denial. All insurance carriers have an appeals process in place for claim denials. Be sure to understand the appeals process, including any deadlines in place. You do not want to miss any deadlines, as this will give the insurance carrier even more reason to deny your claim. At this point, it is a good idea to speak to a qualified insurance claim denial attorney.
3. Seek legal action
If an insurance carrier does not respond to your dispute letter or continues to deny a claim after an appeal, you may need to file a lawsuit in order to recover your compensatory damages. The two main reasons that a person may need to seek legal action against their insurance carrier is for breach of contract or bad faith insurance practices.
- Breach of contract. A breach of contract between an insurance carrier and the policyholder occurs when the insurance carrier denies a claim that is against the strictures of the policy. In other words, the insurance carrier is legally required to abide by the terms set forth in the policy, or they will be found in violation of the contract.
- Bad faith insurance practices. Insurance companies are required by law to treat clients in a fair and reasonable manner. Failing to do so can result in a breach of their duty of care owed to the policyholder, constituting bad faith. Bad faith insurance practices could include willfully misleading a client, denying a claim that should be covered, making unreasonably low settlement offers, etc.
4. Secure a skilled attorney
In the aftermath of receiving an insurance claim denial letter, one of your first calls should be to a skilled attorney. In most cases, a personal injury lawyer will offer a free initial consultation of your case, so you have nothing to lose. With help from an attorney, you will be able to understand all of your options. When an attorney takes your case, they will handle every aspect of the claim denial. This includes gathering the evidence necessary, communicating with all parties involved, ensuring the appeal is properly conducted, and filing a lawsuit if necessary.