Top 5 Reasons Insurance Claims Get Denied and How to Avoid Them

Here are the top five reasons why claims are commonly denied and tips on how to avoid these pitfalls:

INSURANCE

10/5/20242 min read

Reason for Denial: Insurance policies have exclusions, or specific situations and types of damage they don’t cover. For example, most standard policies exclude damage caused by wear and tear or accidents involving an unlisted driver.
How to Avoid: Read your policy thoroughly and ask your insurance representative for clarification on exclusions. Understanding what your policy does and doesn’t cover can help prevent surprises at claim time.

Reason for Denial: If your policy is inactive due to missed payments or has expired, your claim will likely be denied, even if the incident occurs shortly after a lapse.
How to Avoid: Set up automatic payments or reminders to ensure premiums are paid on time. If you experience financial issues, reach out to your insurer to discuss payment options before your policy lapses.

Reason for Denial: Delays in reporting an accident or damage can lead to suspicion about the validity of a claim, giving the insurer grounds to deny it.
How to Avoid: Report incidents as soon as possible. Most insurers require notification within a specific timeframe (e.g., within 24 hours for accidents). Prompt reporting helps maintain transparency and strengthens your case.

Reason for Denial: Failing to disclose all necessary details, whether about the accident or your personal driving history, can lead to denial. If the insurer finds inaccurate information during the investigation, they may deny the claim.
How to Avoid: Be truthful when filing claims and when applying for coverage. Ensure that your information, including details about your driving record, vehicle use, and any incidents, is accurate and complete.

Reason for Denial: Insufficient evidence, such as missing photos, repair estimates, or a lack of a police report, can weaken your claim.
How to Avoid: Take detailed photos, get a police report if required, and collect all relevant documentation (repair estimates, witness contact information, etc.). The more evidence you have, the stronger your claim.

Review Your Policy Regularly: Policies change, so keep updated on any amendments that might affect your coverage.
Be Organized and Transparent: Clear documentation and honesty throughout the process can help expedite and strengthen your claim.
Ask Questions: If you’re unsure about any part of your policy, ask your insurer. They can clarify limits, timelines, and coverage requirements.