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Insurance Company Denied Your Claim?

For whatever reason, we have seen a significant increase in denials of insurance claims in Alabama and southeast Mississippi recently.  That’s odd because we haven’t had many major catastrophic events in quite sometime, which I say which great thanks, and with hopes that I have not jinxed myself.  It’s also odd because the economy seems to be getting better, and insurance companies usually get tighter the worse the economy gets.

Most of the denied claims we have seen recently have been claims for damage to your home or other property caused by fire, wind, construction defects, plumbing failures, and the like.  We are handling several claims related to fire losses right now.  Usually, those are rare.

The most common reason we see for a denial nowadays is an alleged misstatement on the application for insurance.  As you might remember, when you purchased your insurance, you had to fill out an application.  They can be done on the internet, over the telephone, or in writing on good old fashioned paper.  You might even remember that you had to answer a bunch of questions regarding your house and other things before you could get the insurance.  Insurance companies call those questions “underwriting guidelines.”  That is, they use your answers to decide whether they will offer you insurance, and if so, how much it will cost you.

Regardless of how you applied for the insurance, you probably did your best to answer the questions as honestly as you could.  You may not have known that if you answered the questions incorrectly, even by an honest mistake, or if you did not understand the question, an insurance company can refuse to pay your claim later.  That’s what most of us call “the fine print.”  They always get you with “the fine print.”

No one in their right mind would knowingly answer one of those questions incorrectly.  You would not want to risk paying premiums for years, only to have your claim denied when your house burned down.  You’d be broke with no place to live.

When an insurance company denies your claim because they say you misstated something on your application, I know you will be shocked to learn that they are not always right.  There are lots of reasons why even an incorrect answer isn’t a reason to deny your claim.  And sometimes, your answer may not even be wrong, but they claim that it is.

Life insurance, accident insurance, and disability insurance denials seem to be rising too.  A lot of people get frustrated and give up when the insurance company gives them the run-around.  Don’t give up.  It is frustrating, but you can and should get help.

Finally, if you have not had your claim denied, follow the advice of Benjamin Franklin, who said “an ounce of prevention is worth a pound of cure.”  Read your applications carefully.  If you do not understand them, ask questions, and demand straightforward answers.  You might want to record your conversation for later.  (Almost every smartphone has a recording feature nowadays.)  If you still don’t understand the questions, seek help.  Just don’t be left holding an empty bag when you have a loss to your home.

Edwin Lamberth

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