The insurance claims process is not like cashing in a winning lottery ticket. In most instances, claims for insurance policy benefits must be investigated and approved before they are paid out. In some cases, after an investigation is conducted, an insurance company may even deny the claim.
Claims are not denied on a whim, however. There are four major causes behind denied claims:
1. The event was considered an uncovered peril.
There are some incidents that an insurance policy simply won't cover. For example, if your property suffers damage due to an earthquake or flood, your home insurance policy may not cover the damage since earth movement and flood are not covered perils. If a claim were made in this instance it would be denied.
Likewise if you are in auto accident with an uninsured driver and you make a claim against your insurance policy, it will likely be denied unless you chose to carry uninsured motorist coverage.
2. The damages fall below the deductible.
An insurance deductible is the amount of money an insured agrees to pay out-of-pocket for any incidents that occur. If your claim is for financial damages that equal an amount which falls below your deductible, then the claim would be denied. That's why it's so important to monitor all of your deductibles and ensure that they are affordable.
3. The incident was planned.
Insurance policies are designed to compensate you for financial damages after an unexpected hazard occurs. But when the covered event was purposefully orchestrated in order to profit from an insurance policy or a claim amount is overstated in value, then the claim can be denied or approved for a lower amount. An insurance adjuster will help you to make claims that are reasonable. As far as purposeful incidents go, those are denied outright and your insurance policy may be terminated.
4. The event was excluded.
Depending on your specific set of risk factors, your insurance company may exclude certain events from your coverage. When an insurable incident occurs and the event is excluded in your policy then your claim will likely be denied.
You might think it's a good idea to simply explore your Michigan home insurance policies before making claims so that you don't make a claim that’s ultimately denied. But a better idea is to explore your insurance policies before you even have a claim so that you can identify any gaps in your coverage and work with our office on filling them. Call us at 734-421-9900 today to make sure that you’re properly insured.