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What Should I Do If My Insurance Company Denies a Valid Claim?

Posted on May 9, 2018

Dealing with an insurance claim is rarely a pleasant experience, and one of the biggest frustrations many claimants encounter is a denial of a valid claim. Insurance companies make money by collecting premium payments from policyholders to maintain their coverage. An insurer loses money when policyholders make claims for coverage against their policies. When you need help with a claim, discuss it with an attorney who has experience navigating the insurance claims process and knows what to expect when it comes to dealing with claims adjusters.

Preparing for an Insurance Claim

It’s a very good idea to hire an attorney to help you with your insurance claim. Insurance companies use many tactics to try to low-ball claimant settlement offers or deny claims in the hopes that claimants will simply accept the insurer’s first offer. An attorney can help you gather evidence to support your claim and reduce the chances of pushback from claims adjusters. Additionally, if an insurer offers a very low settlement on your initial claim, your attorney can help review your policy to determine whether the settlement is acceptable within the terms of your coverage.

Many insurance plans include disclaimers and special clauses that dictate which situations the insurer will and will not cover, as well as special conditions that some claims must meet to qualify for coverage. An insurance claim adjuster may claim that a certain aspect of your claim disqualifies you from the amount of coverage you’ve claimed, and an attorney will determine whether this decision is valid.

Your attorney can help you draft a simple demand letter for your insurance claim. The letter should include the details of your claim, indicate the parts of your policy that are relevant to the claim, and list how much you demand to settle the claim. Having an experienced attorney draft this letter for you will make it much more authoritative to claims adjusters.

What to Do About a Denied Claim

An insurance company may deny a valid claim for several reasons. In some cases, the insurer will simply look for any stipulations in your policy to deny the claim. In others, the insurer may simply deny the claim hoping you will accept their decision and not press the matter any further. This is a form of insurance bad faith, and this term applies to any situation in which an insurer refuses to investigate a denied claim or uses questionable or unethical methods for denying coverage.

Alabama recognizes insurance policyholders’ right to file lawsuits against insurance companies who act in bad faith. Insurance companies have a duty to act in good faith whenever they process claims. This means processing claims honestly, regardless of whether the settlement causes the company to lose money. When they violate this duty, claimants can file lawsuits against insurers who act in bad faith. Such a lawsuit can yield a better settlement offer as well as specific damages. If the jury deems the insurer acted in bad faith, the plaintiff can secure compensation for his or her pain and suffering, mental anguish, and out-of-pocket expenses resulting from the denial. Additionally, a jury may award punitive damages to punish insurance companies that violate their duty to act in good faith.

If you have encountered resistance or anything resembling bad faith insurance practices in your dealings with an insurance company, reach out to a reliable insurance bad faith attorney in your area to discuss your options. In some cases, simply sending a letter accusing the company of bad faith is enough to encourage a better settlement offer. The insurer will likely prefer to pay out on your claim rather than risk legal action that may damage the company’s reputation. Your Birmingham personal injury attorney will be your best resource for determining your options after a valid claim denial.