Knowing what to do when your insurance company won’t pay a claim can make the company likelier to overturn its decision and settle your claim. Around 90% to 95% of insurance claims get approved, while an estimated 5% to 10% get denied every year.
Although 10% seems small, it translates to close to millions of people losing coverage for various reasons. Denied claims often exacerbate an already grim situation by inflicting more pain and suffering on the claimant.
The first thing to do when the insurance company won’t pay your claim is to review the denial letter with the help of a lawyer to identify the reason for denial. This information will inform your next steps. Common denial reasons range from administrative errors and expired or lapsed policies to suspected insurance fraud and uncovered losses.
Why Are Insurance Claims Denied?
Insurance companies are for-profit entities. They make profits by paying as few claims as possible. For this reason, the insurer will use all available avenues to under-value or deny your personal injury claim. It will appoint adjusters and might even hire private investigators to look into your claim and try to find a reason to deny it.
The following are common reasons an insurance company denies a claim:
Loss Not Covered Under Your Policy
Most claim denials arise when the insurance company rules that you did not suffer a covered loss. Insurance companies know most people do not bother to review their insurance policy details. They take advantage of this mistake to hide some exception clauses in the policy. They only divulge these technicalities in your hour of need, and use them to disqualify you from compensation.
Lapsed or Expired Coverage
Not all policies renew automatically. It is also possible to forget to make periodic insurance policy payments or skip payments due to a lack of finances. Such mistakes offer a legally valid excuse for the insurer to deny arising claims. That is why you should read and re-read the policy’s fine print to avoid these costly mistakes in the future.
Documentation Errors
Submitting claims with false or incorrect details is another possible reason for insurance claim denial. Denial might also happen if the information provided falls short of satisfying the threshold for a valid claim.
Carefully review your claim before handing it over to the insurer to avoid costly mistakes. Be sure to submit your claim within the stipulated time limits.
Delays in Seeking Treatments
Protocol dictates that you seek medical treatments for the resulting injuries right away. So, if you get into an accident and delay getting treatments, you can lose your right to compensation. The insurer argues that you delayed getting medical help because you suffered minor injuries. Adjusters rely on the doctor’s notes detailing your sustained injuries and prescribed treatments to verify your claim.
Bad Faith Insurance Practices
Some unscrupulous insurance companies refuse to pay, simply out of bad faith. The adjusters often use legal jargon to justify denial decisions. You can bring a bad faith insurance lawsuit against an insurance company if the company refuses to pay your claim without any justifiable reason, delays investigating your claim, or engages in other bad faith insurance practices.
Illinois Insurance Consumer Rights
Illinois law requires insurance companies to act fairly and reasonably when handling claims. The company has a legal duty to be reasonably prompt with communications, investigations, and claim processing. Additionally, the adjusters must be trained and conversant with the state’s insurance laws and regulations. The state appoints an ombudsman or a state regulator to represent the rights of persons denied claims. You can also have your lawyers reach out to these mediators.
Here are some illegal practices that infringe on your rights as an insurance consumer in Chicago, Illinois:
- The insurance company delays the claim or honors it partially
- Your claim approval takes longer than necessary
- The insurer denies coverage without providing legally justifiable reasons
- The company refuses to defend you despite having a liability policy
- The insurer fails to communicate with reasonable promptness after receiving your claim
- The company fails to perform due diligence in investigating the case
What to Do When Your Insurance Company Won’t Pay a Claim
Find out Why the Insurance Company Denied Your Claim
The insurance company must provide the reason for denying your claim. The company should cite or quote a paragraph or provision that informed the decision to deny the claim. Besides the denial letter, the insurer should also send you an explanation of benefits (EOB).
At times, the insurance company fails to pay the claimant due to missing information. For example, the claim could be missing a critical medical note from your doctor stating that you should not work until your injuries heal.
Insurers use codes to explain the details shared in the denial letter. Some people have a hard time understanding these codes. Call the insurance company for further clarification if you cannot understand the codes. Alternatively, ask a lawyer with an excellent record of handling claims like yours to help you review the denial letter.
Collect Adequate Evidence
You must collect relevant evidence to support and validate your claim. If you are a car accident victim, you need a copy of the police report, medical records and physician’s notes, witness statements, and photographic/video evidence to stand a better chance of receiving a reasonable car accident claim settlement. If you get stuck with the documentation of a claim, you can visit the insurer’s official website and get all the information required for a valid appeal.
Complete the Necessary Paperwork
The appeal process involves writing several crucial letters. You fill out various forms with pertinent details, such as your insurance information and claim numbers. Instead of drafting your appeal letter from scratch, use the templates on the insurer’s websites for faster results.
Stay Organized
Save copies of your communication with the insurer and other involved parties. If possible, record the phone conversations about the case too. For reference, you should note down the names and job titles of the insurance representatives. You can request the representative to provide a phone call reference number if you need to call back.
Stay Determined
Do not allow the often protracted and frustrating process to force you to abandon the course. Instead, remain consistent and determined to see the process to its conclusion. Let the insurer know you plan to follow through with the claim, no matter how long your settlement takes. That way, the company has no alternative but to listen to you and possibly offer a reasonable settlement.
Prepare for a Claim Appeal
If your efforts to convince the insurers to pay are unsuccessful, you should consider appealing. This level involves taking grievances to the state regulators with the help of your lawyer. This regulatory body has the power to rule whether the denial was valid or the insurance company did act in bad faith.
Before pursuing a lawsuit against the insurance company, you should inform the company of your intentions. In most instances, the company does not want to get drawn into expensive legal disputes. After all, it is usually cheaper for the insurer to pay up than proceed to the courts.
The insurer knows that the courts may rule in your favor, resulting in a much higher payout. Worse still, the company can lose its practicing license if found to have acted in bad faith.
How Long Do Insurers Have to Settle a Claim in Illinois?
In Illinois, insurance companies have a grace period to contest or affirm a claim. The law grants these companies at least 45 working days to process and settle the client’s claims. The insurer expects the claims to get filed within 15 days after the incident, be it an auto accident, hospitalization, or home fire.
Illinois insurers must acknowledge and start processing a claim within 15 working days of receiving your claim. The company must begin the claim investigations within 21 days of receiving the claim. Further, the company must communicate the investigation findings within 15 business days.
If the insurer denies coverage or intends to pay a lower settlement than that demanded by the claimant, the company has 30 working days to issue a letter explaining these decisions. Knowing what to do when your insurance company won’t pay may help you protect your rights and interests.
