Surprising things that can get your claims denied: And how to avoid them

Common Reasons for Claims to Be Denied

There are a number of reasons your auto or home insurance claims could be denied based on your policy information. A lot of these are administrative errors like not providing enough information, which can be rectified by resubmitting. Others are harder to fix. 

Here are a few to be on the lookout for.

Insufficient coverage

You can’t expect your insurance company to pay for things you don’t purchase insurance for. For auto insurance, this could mean not buying comprehensive or full coverage insurance and expecting a payout when you hit a deer. 

Excluded drivers 

If your vehicle was being driven by a driver explicitly excluded from your policy, your insurance company is likely to reject your claim. 

Waiting too long

For both auto insurance and home insurance, it’s important to file the claim quickly after the accident or event. By waiting too long, the insurance company may deny your claim because they can’t adequately investigate it. After all, it becomes difficult to prove that the damage wasn’t from some other cause after a certain amount of time has passed.

Nonpayment/cancelled policy

This one seems obvious, but if your policy isn’t active at the time the damage is sustained, then the insurance company is not obligated to pay the claim. You should always avoid missing payments. If you’re switching insurance companies, never leave days without coverage in between!

Damage was from wear and tear

This one again applies to both home and auto insurance. Insurance is designed to cover sudden and abrupt damage. If you have a slow leak in your basement that causes mold to form, insurance will not cover it. Or if your engine wears out from longterm use, your insurance will not replace it. 

Fraud or malicious intent

Insurance will not cover damage you intentionally cause to your home or vehicle. Any time you file a claim, the source of loss will be investigated to make sure what you have reported is accurate. Not just the claim can be looked at, but anything you knowingly lied about when getting your policy can lead to your claims being denied. 

DUI/DWI

If, during their investigation of an accident, the insurance company discovers that you were under the influence of alcohol or other substances, they may deny your claim. Learn more about DUI violations and insurance.

Peril is not covered

This one is particularly relevant for home insurance, but not all perils are covered, such as flooding, which usually requires an additional policy. If you submit a claim for a peril that isn’t covered by your policy, it will be denied. 

Poor maintenance

If damage arises from long-term neglect, such as homeowners ignoring a small leak or failing to maintain an appliance that led to the damage, insurers may reject the claim. Properly upkeep of your home is important to keep repair issues from escalating. 

Surprising Reasons Your Claims Could be Denied

If your claim is denied, it’s likely for one of the reasons above. However, there are some other reasons that might surprise you that could lead to a claim denial.

Social media posts

Be careful what you post online. One report found that in 42% of disputed insurance claims, social media posts were the key to denial or reduced payout.^[1] And 68% of U.S. insurance companies have dedicated social claims review units. These are most often used to dispute claims that involve personal injury, such as a person claiming injuries that keep them confined to their house, who are shown in social media posts to be more mobile than they reported. This is yet another reminder to be aware of what you’re posting online and to make your accounts more private. 

Drones 

Some major insurers are using aerial photos taken by drones to deny home insurance claims. Looking for things like tree limbs overhanging roofs, their aerial photos, often analyzed by AI could lead to claims being denied for failure to maintain the home.^[2] There’s not a lot you can do to avoid this other than to make sure that you properly maintain your home from the outside. If necessary, you might need to have your own photos taken to refute the insurance companies, if you think they are outdated or inaccurate. 

Artificial intelligence

Okay, this one probably isn’t surprising at all because these days it’s more surprising to find something AI isn’t impacting. That said, insurance companies have been leveraging AI to devalue and, in some cases, deny claims. The upside is that these tools are able to comb through vast data very quickly and can expedite the claims processing time. The bad news is that their robot efficiency is primarily used to save the insurance company money, and if they make a mistake, it’s probably in favor of the insurance company.^[3] 

Tracking devices

If you’re a good driver, using a usage-based insurance or telematics policy might save you money. However, be aware that some of the devices used to track your driving can also be used against you in the claims process. If you are involved in a car accident and file a claim, your insurance company can reference data from these devices to deny your claim.^[4] The best defense here is awareness and knowing in advance if a telematics policy is the right choice for you based on how you drive.

What To Do If a Claim Is Denied

If your claim is denied, you can still appeal it. Start by reading the denial letter carefully to understand the reason and determine if it’s worth appealing. If it’s because of a lack of information, that’s an easy fix, and you can then resubmit. Or if it’s because you don’t have the coverage (such as your car was vandalized and you only have liability insurance), you know not to waste your time and to maybe increase your coverage for next time.