Can You Still Get Coverage After a Denied Claim?

Can You Still Get Coverage After a Denied Claim?

When you buy insurance coverage, you expect it to be there for you when you have a covered expense or have suffered a loss. You have put your trust in the insurance company that tells you to "trust us" when it sells you the policy. You pay your monthly premiums; therefore, do not worry about coverage when it is time to file an insurance claim. You anticipate the claim process going smoothly and your insurance company upholding its end of the bargain.

Many people are shocked to learn that an insurer violated their trust and denied a valid claim. Do not be concerned that a denial is the end of the road, and you are left completely high and dry, however. You do not have to simply accept the claim denial and take the loss quietly.

If the language of your policy supports and justifies your claim, you can take the insurance company to court. A judge will decide whether the insurer should cover your claim, and they can order the insurance company to pay your rightful benefits. First, you must hire an insurance coverage attorney to fight the insurance company effectively.

Why Wrongful Claim Denials Happen

One of the unpleasant realities of the insurance business is that companies selling insurance are largely for-profit entities. They make money by taking on risks. They spread that risk out as much as possible and come up with a price for accepting the risk of insuring you.

Insurance companies do not blindly make this calculation. They have many actuaries who can use statistics to price this risk. The result is the premium quote you receive when seeking insurance.

The insurance company makes money when the premiums it collects are greater than the claims it pays and administrative costs. Thus, the company tries to minimize the amount it pays out in claims. They accomplish this by denying claims entirely or trying to underpay claims that policyholders make. The way the insurance company operates has been entrenched over time, and it is part of what people should expect when they file claims.

However, you should not accept a wrongful denial so the insurance company can have greater profits. Instead, protect yourself by seeking the right legal assistance from a claim denial attorney.

The Insurance Company Must Honor Its Contract with You

Your insurance coverage is a contract between you and the insurance company. So long as your claim falls within the language of your policy, they are obligated to cover the damages you have suffered per the policy (and up to the policy limits).

If the insurance company denies your claim and refuses to cover your damages, they are in breach of contract. Then, you can file a lawsuit against the insurance company to receive what they owe you.

The insurance company has its own lawyers and creative ways of trying to deny your claim. They often split hairs and use legalese in the contract to explain why the policy does not cover your claim.

Thus, you receive a claim denial instead of the expected benefit payment. The insurance company will tell you that your claim falls outside your coverage or fits squarely into one of the policy exclusions (when they have shoehorned it into an exclusion).

Having Insurance Does Not Always Mean that the Insurance Company Will Pay You

There are numerous examples of how insurance companies have denied large classes of claims that policyholders expected to be covered. One recent example is the business interruption claims filed by policyholders seeking compensation for their losses during the COVID-19 lockdowns. The insurance companies largely denied these claims when policyholders expected proper payment. Policyholders have had to sue insurance companies; some have won their lawsuits.

Unreasonable claim denial can also happen to you on an individual level. You can expect the insurance company to closely review the language of your policy to see if there is any way that they can deny your claim.

This behavior always happens, no matter what type of insurance you have. People with health insurance often are shocked to learn that the insurance company is denying their request for coverage, and they look for legal options.

Ways to Challenge a Claim Denial Without Filing a Lawsuit

Before you file a lawsuit against the insurance company, you should ask for an internal review of the denial. The insurance company may refer your case to another division, where a different person will consider your claim. While the insurance company will rarely overturn its denial, it can help your lawsuit if you have more documentation of the denial.

Your state can also have an agency that reviews insurance company coverage denials. For certain types of insurance (including health insurance), the state may either review a denial or mediate between you and the insurance company. The state agency's opinion can act as a check on insurance company overreach.

You Need an Attorney to Go up Against the Insurance Companies

The insurance company has its lawyers on retainer to defend it from lawsuits. These lawyers often do nothing but defend insurance companies, so they know all the tricks used to keep you from getting money. If you do not hire an aggressive attorney, these lawyers can help keep you from getting paid what you deserve. An entire infrastructure aims to upholding and justifying the insurance company's actions in court. You can and should take action to keep that from happening.

Your Policy Terms Will Control Your Case

A lawsuit against the insurance company will begin with the exact language of your policy. Insurance companies expertly craft policies to give them the maximum possible protection instead of you. They have tried to make exclusions as broad as possible while narrowing the circumstances under which you can receive benefits.

In most cases, the language of the policy is what will control your case. However, the insurance company does not get the only final say over how to interpret the language of your policy. Although they may say your claim is not covered, the court has the last say when you file a lawsuit.

A court will look at:

  • The exact language at issue in your policy
  • The facts of your case


How Courts May Interpret the Language of Your Insurance Policy

In some cases, the language of the policy is relatively straightforward. The court may find that your coverage falls squarely into the contractual language and does not fall under one of the exclusions to the policy.

On the other hand, the court may accept the insurance company's arguments about what the policy means and why your damages are not covered.

If the language of your contract is ambiguous, the court will use principles of contract interpretation to determine what it means and whether your claim is covered. In some cases, close calls may go against the insurance company since it drafted the contract in the first place.

Both you and the insurance company will make different arguments about what the policy means and how the facts apply to the actual contract. The insurance company will need to have a sound argument. Otherwise, they can face trouble in legal action against them directly.

You Might Sue the Insurance Company for Damages

The insurance company simply cannot deny your claim just to deny it. Some laws govern how an insurance company can behave. Although it often seems like insurance companies do what they want, they can be held legally accountable for their actions.

You can sue the insurance company itself in addition to seeking the money that you deserve. You can file a lawsuit under the common ground theory of bad faith. Every party to a contract is supposed to act in good faith.

An insurance company can act in bad faith when they:

  • Unreasonably delayed processing and response to your claim
  • Fail to conduct a complete and thorough investigation while processing your claim
  • Unreasonably deny your claim when there is a sound basis for it
  • Make unreasonable demands of you during the claims process
  • Make threatening statements to you when you are filing a claim


Damages in Bad Faith Lawsuit Against the Insurance Company

If you win a bad faith lawsuit, the insurance company will need to pay you damages from its pocket in addition to what they owe you for the claim.

Your case can recover:

  • Consequential damages for the insurance company delaying your payment
  • Emotional distress damages for the angst that the insurance company put you through
  • Punitive damages that are the jury's way of sending a message to the insurance company


Insurance companies fear bad faith lawsuits because the money comes from their pocket. The prospect of a bad faith lawsuit may give you some leverage, but you will need an attorney to give your threat some credibility.

If the insurance company has gone too far in their treatment of you, your lawyer can hold them accountable. However, not every single bad act of the insurance company rises to the level of bad faith. There is actually a relatively high bar that you need to meet to prove insurance company wrongdoing.

Other Ways to Sue the Insurance Company for Denied Claims

You may still have the right to sue the insurance company, even if you cannot reach the high bar for bad faith. Some policyholders have successfully sued insurance companies for negligence.

Here are some situation where you can hold an insurance company liable for negligence:

  • The agent did not provide you with the coverage that you requested
  • The insurance company did not adequately explain to you what the policy covered
  • The insurance company did not contact you to tell you there was an issue with your policy or that it was about to expire
  • The insurance company conducted a slapdash investigation of your claim


Contact an Attorney When the Insurance Company Has Denied Your Claim

If you believe you received a wrongful claim denial from an insurer, you should contact an attorney immediately to review your legal options. Your lawyer can contact the insurance company to resolve the disagreement. Sometimes, insurance companies will respond differently to you when they see they have hired an experienced attorney to hold them accountable.

How an Insurance Coverage Attorney Helps You

Your lawyer can:

  • Review your policy to determine whether you have a cause of action against the insurance company.
  • Communicate with the insurance company for you, sparing you from the stress of the insurer trying to push you around.
  • Help determine the most effective way to get your due money from the insurance company.
  • Determine whether you may have grounds to sue the insurance company directly.
  • Take your case to court, arguing why the insurance company must pay you (and anything the insurance company did wrong to warrant additional compensation).
  • Negotiate a possible settlement with the insurance company.
Insurance Litigation Lawyer, Peter M. King

Contact an attorney early after a claim denial. You may have a limited amount of time to act. Either way, you will need the money because the alternative will be that it comes out of your pocket. You cannot afford to wait to take action, nor can you afford to leave anything to chance. Hiring a lawyer can give you a better chance of recovering financially from the insurance company.

You may not need to pay out of pocket to hire an insurance recovery lawyer. Your lawyer may work on a contingency arrangement, which means you only pay fees if you succeed. If you have a recent claim denial and have no idea how to battle the insurance company effectively, you may obtain nothing without a lawyer.

The insurance company will only give you the money you deserve with a tough fight. That is precisely why you need an attorney who knows how to stand up for you against a big company that is making your life harder.