Two types of insurance claim denials and only one of them is right

In my experience there are two types of insurance claims that get denied!

And it’s not:

• maintenance and defect exclusions (although those happen all the time in Property policies);

• or assumed liability or major shareholder (in PI and ML)…

I am talking about the motivation for the denial and NOT the technical reason.

CAT1

The first category is well known, it’s the claim that the insurer has rightly denied. Trust me, when I say there are a lot of of these.

Remember, it’s the insured’s obligation to prove the event has fallen within the policy insuring clause.

Therefore, the event might be covered but if you haven’t obtained the necessary evidence (perhaps a building consultant report or engineer evidence) you may lack the necessary material to prove your claim.

A classic example is the absence of a capital C claim under an indemnity policy. It doesn’t matter if a claimant has told you their concerns, it’s not their concerns that trigger a claim - it is proceedings and in many policies a demand as well. You might even need to incur legal costs, but that doesn’t mean you have a claim.

That’s where we come in - specialist professional indemnity and property damage insurance lawyers are not just lawyers for debating things with an insurer but obtaining the right further materials to substantiate the claim.

CAT2

Now this is the interesting one, the second category is the type of insurance claim that the insurer does not want to cover but the insurance contract language is…let’s say, not exactly what they were hoping for.

It depends on the circumstances and in some cases it isn’t what the insured can see, like a reinsurer behind the scenes having an opinion and pushing back on a big claim.

Put another way, this is the type of claim the insurer is pushing to not pay but it’s covered by the contract (or the ICA or case law supports the insured not insurer). Trust me, when I say, I see these a lot. Section 54 for one.

If the policy covers the claim and if the exclusion doesn’t apply - tough terms & conditions insurers!

This second category of claims doesn’t rightly belong in AFCA by the way. They are the claims you may have to fight to win, incur legal costs and to recover your costs you need to file in court!

So, next time your insurance claim is denied, have a think about it carefully, don’t just assume the claims officer is right, get a specialist insurance lawyer to look at your claim.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• insurance law
• litigation