How to Deal with a Business Insurance Claim Denial

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Operating a business, regardless of its size, comes with many different risks. Fortunately, you could try to mitigate some risks with sufficient insurance coverage that covers your assets and clients against various types of injury.

But when your insurance provider denies your claim, you’ll find yourself exposed to exactly the kind of risks you purchased your insurance for.

Why Your Insurance Claim Was Denied

To figure out why your insurance provider denied your business insurance claim, you need to thoroughly review the denial notice to pinpoint specific reasons you’re being refused coverage. There are various reasons why an insurance provider might reject a claim, with the following reasons being the most common:

  • The claim wasn’t filed on time.
  • The insurance provider suspects fraud.
  • The insurance policy doesn’t cover the specific injury.
  • The policyholder has already exceeded or met the coverage limits.

Preparing Your Response to the Claim Denial

Your insurance policy documents will indicate specific incidents it covers your coverage limits, the procedure for filing claims, as well as many different aspects of your coverage.

So, when preparing your response, it’s immensely vital that you carefully pore through the terms and conditions of your business insurance policy with your bad faith attorney in Los Angeles to understand the reasons for your claim denial.

You should then draft a letter of appeal that clearly explains your arguments for coverage based on your policy’s terms and conditions and facts surrounding your specific situation. Don’t forget to attach any supporting evidence.

Your insurance provider will either stand by its decision or reverse it, and if your provider still denies you coverage, you can file a bad faith insurance claim in court.

Filing a Bad Faith Insurance Claim

In the event that your insurance provider still rejects your insurance claim, you have the right to take your bad faith insurance claim to court. Remember that an insurance policy is a contract so if your insurer refuses to make good on its obligations, this will be considered are a breach of contract.

Additionally, depending on the jurisdiction, you could also file for a bad faith insurance denial as a type of tort. Filing a tort claim could be a great option since tort actions usually result in awarding punitive damages to plaintiffs, which also typically exceed the insurance policy’s value.

Do note, though, that not all denials actually involve bad faith, so you need to make certain that your case really does involve bad faith. Basically, bad faith involves situations or acts in which your insurance provider rejected your claim based on unreasonable reasons.

It also involves an insurance company ignoring evidence, lying, refusing to investigate, or investigating a claim poorly in order to frustrate a policyholder’s attempts to obtain insurance benefits that is rightly his or hers. Receiving a denial of your business insurance claims raise lots of questions concerning your policy’s terms and conditions, as well as options for litigation. That said, your best bet to win your bad faith insurance claim is to seek help from an attorney with ample experience in bad faith insurance claims.

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