Often we come across cases where the home insurance claims have been denied. This forms one of the major complaints against home insurance companies. There are several reasons why the insurance companies deny payment of insurance. A few of the most glaring reasons are the following:
Default in payment of premiums
Timely payment of premiums is essential to keep the insurance alive. In case there is a break in payment of premium, it means the insurance cover gets suspended.
Doubtful or fraudulent claims
Sometimes people raise false claims, which may be found to be inflated or inaccurate. The claim adjusters investigate the claims and find them to be bogus. Under such situations, the insurance company can deny the claim.
The policies specify certain time-frame for making the claims. The related documentation and follow-ups need to be done in time. Undue delay in filing claims can render the claim to be denied.
The onus of proving a claim for damages lies on the property owner. For this sufficient proof must be gathered through photographs and statement of approved surveyors and assessors. Insufficient documentation is a major cause for denial of claims.
Clauses of exclusions
Insurance policies come with the perils that are covered. In case of any damages caused by a peril that is not included; then such exclusions being beyond the coverage; the claim is liable to be denied. In areas which are prone to earthquakes, floods, hurricane, storms etc these perils are excluded in the normal insurance policy. These excluded perils can be especially covered separately by paying an additional premium.
The HO1 Homeowners Insurance covers 11 perils that are mentioned therein; HO2 covers 16 named perils; whereas HO3, which is the most preferred insurance covers all perils except those which are expressly excluded.
For a successful claim the insurance company will verify if the loss has been caused by a peril which has been covered in the policy.
The deductible in a policy indicates the amount which you are willing to pay first, in case of a claim. If the damage is less than the deductible then insurance policy will not cover the damage, and thus deny the claim.
Negligence in taking sufficient preventative measures
Often, following a property damage or loss, the property needs to be protected to prevent further damage.
Willfully neglecting to do so can result in more damage to the property, thereby incurring a much heavier loss. This can make an insurance company deny the claim. The policyholder must prove that he had taken adequate measures possible to contain the damage and reduce the loss of the property.
To avoid your claim being denied; you must:
- Make regular premium payment
- Know the time limits of filing claim
- File the claim with the insurer promptly and as soon as possible with related documents
- Study the exclusions in the coverage; take adequate coverage as per your requirements
- In case of a damage, ensure the best to contain the damage and prevent further loss
- Document the damage with evidences and testimonials while filing the claim