Insurance claim denial

An insurance claim denial occurs when an insurer refuses to pay a requested claim after reviewing submitted information. Insurers commonly deny claims due to policy exclusions, such as pre-existing conditions in health insurance or intentional damage in auto policies.

Claims are also rejected for incomplete documentation, including missing police reports in theft cases or absent repair estimates for homeowners’ losses. Failure to pay premiums on time triggers denials, with over 50% of lapsed policy cases resulting in unpaid claims according to the NAIC’s 2022 report.

Incorrectly filled forms prompt denials, as 15% of denied health claims stem from administrative errors (KFF, 2021). Filing after deadlines leads insurers like State Farm and Allstate to deny late car accident and property loss claims, following state-regulated reporting periods.

Misrepresentation or false statements cause immediate denials, as cited by the FBI, which notes fraudulent claims cost insurers more than $40 billion yearly, according to a report from YourInsuranceInfo. Experimental treatments or out-of-network providers drive health insurers like UnitedHealthcare to reject nearly 1 in 5 special procedure claims (GAO, 2022).

Policy limits cap payouts; once reached, further claims for the same event face automatic denial regardless of damages shown. Disputes over cause–for example, wind versus flood in hurricane losses–lead insurers such as Nationwide to refuse coverage outside defined peril categories.

Appealing a denial requires submitting evidence and sometimes legal support; less than 1% of denied employer-sponsored health plan claims were appealed but nearly half of those appeals resulted in reversals (KFF, 2021).