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Insurers often have legitimate reasons to deny claims

While the focus of this blog is bad faith insurance, it is important to also realize the other side of the coin: insurers are often justified when they deny a claim. It may feel like they are acting in bad faith, but in reality they are acting well within their rights.

So what are some common reasons that an insurer denies a claim? Let's look at a few, in the context of life insurance:

  • The contestability period: All policies will have a "contestability" period, which usually lasts for two years after the policy takes effect. If the policy triggers during this time, the insurer will fully investigate the cause of death and the information you provided. If the investigation finds a misrepresentation, then they could deny the claim.
  • Incorrect or missing information: If you get a policy but you selectively disclose certain information and obscure other info, it can lead to the policy being canceled or a claim being dismissed.
  • The conditions aren't covered by the policy: Specifically with life insurance, if the type of death isn't covered by the policy then the claim won't be upheld.
  • Policy premiums lapsed: If you fail to keep up with your policy premiums, then your policy (or your claim) will not be upheld.

Every case is a little different, and every policy or claim needs to be addressed differently. If you feel that your insurer is engaged in bad faith behaviors, then you should consult with an attorney.

Source: United Policyholders, "4 most common reasons why insurers deny life insurance claims," Emmet Pierce, Accessed May 18, 2017

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