Steps to Take if an Insurance Carrier Denies Your Injury Claim

Insurance Carrier Law

December 28, 2022 by Anthony Riccio

Insurance may be the only available source of compensation after someone gets injured. When an insurance company denies a claim for benefits, it can cause significant financial hardship for those who must bear the cost of their damages. Insurance carriers deny claims because they don’t believe they are obligated to provide coverage. 

Insurance companies write insurance contracts, and the payment of benefits is subject to the terms of the contract. The law requires insurance carriers to deal fairly with persons who make insurance claims. Companies that fail to act in good faith when handling insurance claims should be held accountable.  

An insurance claim denial does not mean the claim is over, but it does mean an insurance carrier is challenging the claimant’s right to receive benefits under their contract. Appealing the decision to the insurance company is usually the first step in pursuing benefits after having a claim denied. 

How Insurance Denials Happen

The obligation to provide insurance coverage is triggered when the claim complies with all the provisions of the contract. Insurance contracts are written with very specific language geared toward limiting the financial exposure of the underwriting company. Certain prerequisite conditions must exist before an insurance company is obligated to provide benefits. Also, the policy language is specific about excluding particular circumstances from coverage.

Failure to supply adequate information when submitting an injury claim can result in the claim being denied. The denial notice should provide the reasons that coverage is being refused. The response on appeal to the insurance company needs to address each reason and explain why coverage should be provided. 

Common Reasons Insurance Companies Deny Claims

Insurance companies must be specific when they deny a claim. They should identify the relevant policy language and explain the circumstances they relied upon to arrive at their decision. Some reasons insurance companies may give for denying an injury claim could be:

  • The insurance coverage was not in effect at the time of injury.
  • A failure to pay the policy premium negates the insurance company’s obligation to provide coverage.
  • The policy excludes coverage by a specific provision.
  • The claim was not made within the specified time period.
  • There is no coverage provided for the claimed injuries.
  • The fault of the injured person limits the insurance company’s responsibility to provide coverage.

In some situations, an insurance company may be justified in denying coverage based on the terms of the applicable policy and an objective review of the facts. At other times, the facts relied on to deny coverage may be subject to interpretation, and the insurance carrier’s interpretation may be proven incorrect.  

Is a Reservation of Rights the Same as a Denial?

Sometimes an insurance carrier may respond to a submitted claim with a reservation of rights letter. A reservation of rights letter is not a definite denial of a claim, but it is a notice to the recipient that the insurance carrier suspects coverage may not apply. It also preserves the company’s right to deny coverage at a later time, pending further investigation. 

Wrongfully denying an insurance claim can result in penalties imposed against the company. So rather than risk being penalized for wrongful denial of coverage, issuing a reservation of rights letter means the carrier will provide coverage subject to the right to seek reimbursement of the benefits paid if it is later determined that coverage should be denied. 

Filing a Complaint Against an Insurance Company for Denying an Injury Claim

Personal Injury Claim

If appealing directly to the carrier does not prove satisfactory, persons who have received coverage denials from insurance companies can file complaints with the Consumer Service Unit (CSU) of the Massachusetts Division of Insurance. The CSU has the authority to make sure a carrier has complied with its policy provisions and applicable state laws. The insurance carrier must then take the corrective action deemed appropriate by the CSU.  

The CSU cannot assist a person when they have legal representation or are already involved in a lawsuit against an insurance company. They can only help facilitate the correct application of the laws regarding the interpretation and enforcement of an insurance contract. 

Insurance Companies Must Settle Claims in Good Faith

Acting in bad faith is the term used to describe insurance companies that operate in deliberate ways to try to avoid their obligations to process and pay legitimate claims. Under Massachusetts consumer protection laws, persons are prohibited from engaging in “unfair or deceptive acts or practices in the business of insurance.” Specifically included in the prohibition are the following types of unfair claims settlement practices:

  • Misrepresenting facts or policy provisions
  • Failing to respond to communications promptly
  • Failing to investigate claims promptly
  • Refusing to pay claims without conducting a reasonable investigation 
  • Failing to affirm or deny coverage promptly
  • Failing to settle claims promptly and fairly when liability is reasonably clear
  • Attempting to settle a claim for less than is reasonably appropriate given the circumstances
  • Delaying the processing of a claim by requesting duplicate information
  • Failing to promptly provide a reasonable explanation for denying a claim

An insurance company that violates the statute has acted in bad faith, and to the extent it results in injury to an insured, the carrier can be held accountable to pay damages. A court can force an insurance company to stop what they are doing and suspend or revoke its operating license. Restitution can be awarded to a claimant for actual economic damages and punitive damages when a carrier’s conduct has been especially bad.

If an insurance carrier or their representative is going to engage in bad faith claims settlement practices, there is little that an injured person can do except file a lawsuit. It is obviously better for the person who is injured to have a carrier affirm coverage when a claim is first submitted, so the claimant is able to obtain benefits as quickly as possible.

Submitting accurate and relevant information to a carrier when making an injury claim helps convince the company the claim is legitimate. Understanding the benefits, conditions, and exclusions of the insurance coverage is essential so the claim can be presented in the way that is most likely to get coverage affirmed. 

If you have been injured in an accident, please Call Riccio Law at 617-404-8878 to schedule a free consultation.