In What Circumstance Would A Property Insurance Claim Be Rejected

Nov 28, 2022
In What Circumstance Would A Property Insurance Claim Be Rejected

In the aftermath of a disaster, most homeowners rely on their insurance company's settlement to restore their lives to normal. Sometimes though, things don’t pan out the way they are supposed to, and insurance claims get rejected. 


This can leave entire families empty-handed and without the necessary money to make crucial repairs to their homes.


While filing claims is usually straightforward, it doesn’t hurt to know in what circumstance would a property insurance claim be rejected. That way, you can avoid the long and arduous process of filing an appeal.


Top Reasons For Home Insurance Claim Denials


While there are multiple reasons why this might happen, thankfully, you can avoid denials if you know what to look out for. Most commonly, insurance companies reject claims for the following reasons:


1. Missing the filing deadline


When you were asking yourself in what circumstance would a property insurance claim be rejected, this one probably didn’t cross your mind. However, many claims get denied because claimants miss the filing window.


Filing and documenting claims is a time-sensitive matter, and depending on your policy, it might be longer or shorter. Typically, the filing window with many policies is around 180 days.


If your home was damaged, contact your insurance company to start the claims process as fast as possible.


2. Lack of coverage


Unfortunately, home insurance doesn’t cover all types of damage, and the standard policy only applies to lightning, fire, and wind damages. To be protected in case of a flood or water damage, you’ll require a separate policy.


Homeowners sometimes assume everything will be covered, and are then surprised when their provider denies their claim. A similar situation occurred in Orlando during
Hurricane Ian. Many people in Central Florida didn’t have separate water damage insurance, so when extreme flooding happened, they had no way to recover the damages.


3. You didn’t pay your premiums


You should never miss your insurance premium payments as it may cause your policy to lapse. Even if your home suffers extensive damage, the insurance provider won’t care, they’ll have enough reason to deny your claim.


To avoid this grim scenario of losing coverage, keep up with your payments. An additional reason to do so is to keep your record rating from tanking, which could lead to more expensive insurance premiums in the future. 


4. Insufficient damage documentation


Don’t rely on the insurance company’s adjuster to document the damage - you should do it yourself. The burden of proof is on you, so it’s necessary to back up your claim with evidence and as much information as possible.


Document the aftermath of the disaster in detail in order to prove your case. This includes videos, photos, and all the other relevant documents such as receipts.


5. Lack of care


As a homeowner, it’s also your responsibility to maintain your property. Sometimes, insurance companies may deny claims if the lack of care contributed to the incident or damage in any way, shape, or form.


Just take a look at your insurance policy and you will probably learn it stipulates that your property should be kept in great condition to be able to recover the damages.


6. Overestimating the extent of the damage


While it’s imperative to document the damages to your property, you should never take creative freedom when doing so. Lying or trying to mislead your provider will come back to hurt you. 


Your insurance company will send their adjuster to inspect the damage. If they learn you haven’t given them accurate information in your claim form, they have the grounds to reject your claim.


It’s also important to note that you shouldn’t lie about your previous claims either to maintain a no-claims discount. 


Know Your Policy

Before discussing the reasons that lead to claim rejection, it is vital to understand that no two property insurance policies are the same. So what applies to your neighbor may not necessarily apply to you and vice-versa. Hence, do not go by other’s experiences. Instead, right off the bat, understand the terms and conditions of the policy you have purchased. You have every right to question the insurance agent until the complete picture is clear. In case you don’t wish to go that way, you can hire a public adjuster to help you with the same. If necessary, make notes of your own.

Circumstances In Which Property Insurance Claim Is Rejected

The common reasons that lead to rejection of property insurance claims are:

1. The Loss Is Not Covered In Policy – Property insurance policies are tailored as per need. Say you buy property damage insurance and no liability coverage to go with it; in that case, any liability claim arising will not be honored by the insurance company. Let us take another example. If you forgo purchasing flood insurance cover or damage from an earthquake, such a claim will be denied by the insurer. Similarly, there are some exclusions in every policy. If the damage to your property is because of any of the so-called exclusion, it will not be accepted. Hence, as we mentioned above, you should know the terms and conditions of your insurance policy like the back of your hand. Only those losses are honored that are covered in the insurance policy. Anything outside will be outright denied.

2. Unfulfilled Policy Conditions – Some necessary conditions need to be fulfilled by the insured. Failing to abide with them will lead to claim rejection. Examples of such conditions are security locks on all doors leading outside, the necessity of one or more fire extinguishers depending on the size of the property, etc. These conditions are mentioned in the policy document.

3. Delay In Filing Claim – In case of loss or damage to property, there is a set timeframe within which the insurance company needs to be informed and the claim forms filled and submitted correctly. If you fail to meet this timeline, the claim will be denied. But rest assured, the timelines are realistic and can be met with relative ease. This information is available in your policy document. If you cannot find it, your insurance company is just a phone call away.

4. Missed Premium(s) – If you fail to pay one or more premiums against your policy, the insurance company is under no legal liability to honor your claim. Since you broke the terms of the contract by skipping the problem, the damage is now your sole responsibility.

5. Withholding Pertinent Information – Claims arising due to property owners or tenant’s negligence are not covered. These are also the cases where the insured tries to withhold pertinent information that could lead to the truth. So any claim where important facts or information are conveniently withheld by the insured will get rejected.

6. Damage Is Not Documented Correctly – When filing a claim, the property owner has to prove loss. Hence, it is important to document it in detail. You need to provide even small details like date and approximate time of loss, attach pictures and videos of the damage, mention the assets condition prior to the damage, etc. Only with full documentation of a covered loss can you have the guarantee that the insurance company will fulfill its side of the deal.

7. Preventive Steps Not Taken To Contain Further Damage – Once the primary damage has occurred, it is the property owner or tenant’s responsibility to ensure that they take the necessary steps to prevent its further spread. Some of us do it diligently and make copious notes and pics of the efforts, and many of us leave it to chance. The insurance company is under no obligation to cover the secondary loss if you have failed to follow the preventive measures.

8. The Insurer Suspects Fraud – The insurance company conducts its own investigation of the loss. If it suspects fraud and finds any evidence of the same, your claim will be denied. Since they thoroughly investigate every high dollar value claim, it is best advised that you don’t use any underhand tactics. Many times it has been seen that people try to pass off intentional damage to property as accidental. From there, they build a false case to prove loss. These fraudulent methods are not looked upon favorably by the insurer.


What To Do If Your Claim Was Already Denied?


If you received your denial letter, not all is lost. You can still receive your settlement if you know what you’re doing.


Here’s the best course of action:


1. Review your denial letter


If your claim is denied, you’ll receive a formal denial letter. This letter will explain the details of the specific language in the policy that justifies the denial. 


With that said, if you had done any of the previously mentioned reasons or your specific type of damage is not included in your coverage, you may not be able to do anything, no matter how much you try. 


If you still believe the provider should cover your damage, don’t lose any time. Speak to the adjuster who inspected your property or your insurance agent. While it’s usually impossible to change their mind, you shouldn’t give up until you receive the money you are promised in your policy.


2. File an appeal


Arguably the most effective thing you can do at this point is to file a formal appeal. Again, time is of the essence and you should file this as soon as you receive your denial letter. 


When you file your appeal (the exact process is outlined in your policy), a review of your claim will start. This is your opportunity to add any extra evidence to support your position. The more thorough you are in presenting this information, the more chances you have of changing the status of your claim.


3. Consult a public adjuster


Even if your claim is denied, it’s never too late to leverage the services of a public insurance adjuster. They can not only help you properly document and value your losses, but can also verify your coverage and negotiate a fair settlement. 


The sooner you find a public adjuster, the sooner you can avoid the critical mistakes that may lead your claim to be denied.


If you’re looking for a
Florida public adjuster, call Continental Public Adjusters! We’ve been doing this for decades and there’s no claim we cannot handle! Call (800) 989-4769 to schedule a free consultation.


4. File a formal complaint with the state insurance commissioner


If all else fails and you are a policyholder who paid all the premiums, your insurance carrier should process your claim on its own merit. If you believe your insurer didn’t properly review your claim, you should file a complaint with the insurance commissioner in your state.


Do Everything In Your Power To Protect Your Claim


Now that you’re well-equipped with knowledge in what circumstances would a property insurance claim be rejected, you can make certain that all the boxes are checked before filing. 


If you need another layer of protection to ensure a better outcome for your insurance settlement, feel free to ask a public adjuster for help before filing your claim. In doing so, you can save time and money knowing you’ll receive the highest amount of compensation outlined in your insurance policy.


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