When you file an insurance claim, you expect your insurance company to honor its contractual obligations. However, it doesn’t usually happen. Insurers sometimes deny claims unfairly and leave policyholders struggling to recover their losses.
If you believe your claim was wrongfully denied, you must understand the legal rights available to you. Insurance laws exist to protect consumers from bad faith practices, ensuring that companies cannot unfairly reject claims without valid reasons.
Let’s read about some legal rights you have if you’re going through such a situation.
1. The Right to a Written Explanation for the Denial
Insurance companies are required to provide a written explanation when they deny a claim. This explanation must clearly outline the specific reasons for the denial, including any policy provisions, exclusions, or conditions the insurer believes justify rejecting your claim. The insurer cannot simply deny your claim without proper justification.
If the explanation is vague or does not align with your policy, you have the right to request further clarification. Sometimes, insurers use complex language or ambiguous terms to confuse policyholders. If this happens, carefully reviewing your policy and seeking legal advice can help you understand whether the denial is legitimate or a bad faith tactic.
2. The Right to Appeal the Denial
If your claim is wrongfully denied, you have the legal right to appeal the decision. Insurance companies must provide a process for policyholders to contest denials, and you should take advantage of this opportunity. The appeal process often requires you to submit additional documentation, clarify details, or address the insurer’s stated reasons for denial.
When filing an appeal, it is crucial to gather all relevant evidence, such as medical records (for health or disability claims), repair estimates (for auto or property claims), and any communication with the insurer. If your initial appeal is denied, you may have additional appeal opportunities within the insurance company or external regulatory bodies.
3. The Right to Demand a Fair Investigation
Insurance companies are legally obligated to conduct a thorough and fair investigation before denying a claim. This means they must examine all relevant evidence, review your policy carefully, and give your claim a fair assessment. If the insurer denies your claim without properly investigating it, they may be acting in bad faith.
If you suspect that your claim was dismissed without a reasonable investigation, you can request a review of the insurer’s process. You may also hire an attorney to challenge the denial and ensure the insurer upholds its legal responsibilities. In some cases, a lack of investigation can serve as strong evidence in a bad faith insurance lawsuit.
4. The Right to Seek Legal Representation
You have the right to hire an attorney to assist you in challenging a wrongful claim denial. Insurance companies often have teams of lawyers working to protect their interests, and hiring an experienced insurance attorney can help you play on the same level as they are.
A lawyer can review your case, identify legal violations, and negotiate with the insurer on your behalf. Western Justice Associates, PLLC law firm has an experienced team of lawyers who can help you file a lawsuit for bad faith insurance practices.
Not only this, they offer free consultations, so getting their help can be an important step in determining your next course of action.
5. The Right to Request a Copy of Your Insurance Policy
Many policyholders do not have immediate access to their full insurance policy document. If your claim is denied, you have the right to request a complete copy of your policy from the insurance company. This allows you to verify the coverage, exclusions, and terms the insurer is citing as reasons for the denial.
Insurance policies often contain complex legal language, making it difficult to determine whether a denial is justified. Reviewing your policy carefully or consulting an attorney can help you understand whether the insurer’s decision aligns with the contract you agreed to. If the denial is inconsistent with your policy, you may have grounds to challenge it.
6. The Right to File a Complaint with Insurance Regulators
If you believe your insurance claim was wrongfully denied, you have the right to file a complaint with your state’s insurance regulatory agency. These agencies oversee insurance companies and ensure they comply with the law. When you file a complaint, the regulatory body will review your case and may take action against the insurer if they find evidence of wrongdoing.
Regulatory agencies can sometimes pressure insurance companies to reconsider their decisions. In some cases, they may also impose penalties on insurers that engage in unfair practices. While a complaint does not guarantee claim approval, it can add significant pressure on the insurer to act fairly.
7. The Right to Pursue a Bad Faith Lawsuit
If an insurance company denies your claim without justification, delays payment without reason, or engages in deceptive practices, you may have the right to file a bad faith insurance lawsuit. Bad faith insurance occurs when an insurer fails to fulfill its contractual obligations or deliberately acts against the policyholder’s interests.
A successful bad faith lawsuit can result in compensation beyond the original claim amount, including punitive damages, emotional distress damages, and attorney’s fees. Proving bad faith can be challenging, but with strong evidence and legal representation, you can hold the insurance company accountable.
8. The Right to Demand a Reassessment of Your Claim
Even after an appeal, you still have the right to request a reassessment of your claim, especially if new evidence emerges. Insurance companies sometimes overlook critical details or misinterpret policy terms, leading to wrongful denials. If you obtain additional supporting documents, witness statements, or expert opinions, you can use them to challenge the denial.
Some insurance companies allow claim reassessments even after appeals are exhausted, especially if legal action is imminent. Before giving up on your claim, ensure that you have explored all available options for review and reconsideration. You can hire an experienced lawyer to do that for you if you’re unaware of the legal language and terms.