Can an Insurance Company Deny Coverage?

After being involved in an accident, you may be dealing with injuries, medical bills, and vehicle repair bills. You will likely need to deal with your insurance company, and you may be wondering if an insurance company can deny coverage. An insurance company can deny coverage under certain circumstances. Insurance policies typically contain terms and conditions that outline the coverage provided by the policy. If an insurance company determines that a claim or request for coverage falls outside the scope of the policy or violates the policy terms, they may deny coverage.

When Should You Seek Legal Help?

If your insurance claim is denied, you may want to seek legal help. There are several scenarios in which you should consider seeking legal assistance. Some examples include:

  1. Ambiguous or unclear policy language: If the denial is based on vague or ambiguous policy language, it might be worth consulting with a lawyer. An Illinois attorney can review your insurance policy and assess whether the denial is justified or if you have grounds for a legal challenge.
  2. Disputes over coverage interpretation: Insurance policies can be complex, and there may be disagreements over the interpretation of certain provisions. If you believe that your claim should be covered based on your understanding of the policy, but the insurance company disagrees, it may be wise to consult an attorney who specializes in insurance law.
  3. Bad faith practices: If you suspect that your insurance company has acted in bad faith, such as unreasonably delaying or denying your claim without a valid reason, it is crucial to seek legal help. Bad faith practices can include unfairly interpreting policy provisions, inadequate investigation, or unreasonably low settlement offers. An attorney can guide you on the appropriate steps to take and help protect your rights.
  4. Significant damages or injuries: If you have suffered substantial property damage, severe injuries, or significant financial losses due to an accident, it may be in your best interest to consult an attorney. Your lawyer can assess the value of your claim, negotiate with the insurance company on your behalf, and potentially pursue legal action if necessary.
  5. Repeat denials or complex circumstances: If your claim has been denied multiple times or involves complicated factors, such as liability disputes or multiple parties involved, legal representation can be beneficial. An Illinois attorney can navigate the complexities of your case, advocate for your rights, and help you to have a successful claim.

Top Reasons Why Insurance Companies Deny Insurance Claims

Insurance is meant to provide individuals with financial protection in the event of an accident or injury. However, insurance companies may sometimes deny accident injury claims, leaving policyholders frustrated and confused. 

Some common reasons that insurance companies may deny such claims include:

Lack of Sufficient Medical Evidence

One of the primary reasons insurance companies deny accident injury claims is the lack of sufficient medical evidence. Insurance companies typically require detailed medical records and documentation to support the claimant’s injuries. If the documentation is incomplete, inconsistent, or fails to establish a direct link between the accident and the injuries claimed, the insurance company may question the validity of the claim and deny it. It is crucial for claimants to ensure they gather and submit all relevant medical records and expert opinions to strengthen their case.

Pre-existing Conditions

Insurance companies often scrutinize accident injury claims when the claimant has pre-existing conditions. If the insurer can prove that the claimed injuries existed before the accident, they may deny the claim or reduce the compensation accordingly. It is essential for claimants to disclose any pre-existing conditions accurately and provide medical evidence to differentiate between pre-existing injuries and new injuries sustained in the accident.

Policy Exclusions and Limitations

Insurance policies typically contain exclusions and limitations that outline specific scenarios or injuries not covered by the policy. These exclusions may range from intentional self-inflicted injuries to injuries sustained while participating in high-risk activities. If an injury falls within the policy’s exclusionary provisions, the insurance company may deny the claim outright. Policyholders should carefully review their insurance policies to understand the coverage limitations and exclusions to avoid surprises during the claims process.

Failure to Meet Filing Deadlines

Insurance policies usually have specific deadlines for reporting accidents and filing claims. Failure to meet these deadlines can result in claim denials. Insurance companies may argue that the delay in reporting the accident or filing the claim hinders their ability to investigate the incident thoroughly, potentially raising questions about the legitimacy of the claim. It is crucial for claimants to promptly report accidents to their insurance companies and adhere to the specified timelines for filing claims.

Policy Lapses or Non-Payment of Premiums

Insurance policies require consistent premium payments to remain in effect. If a policyholder fails to pay premiums on time or lets the policy lapse, coverage may cease, and the insurance company can deny any subsequent claims. It is crucial for individuals to stay up to date with premium payments and promptly renew their policies to avoid coverage gaps and claim denials.

What Are Unfair Insurance Claim Practices?

Unfair insurance claim practices refer to actions or behaviors by insurance companies that are considered unethical, deceptive, or unjust when handling insurance claims. These practices are generally intended to minimize or deny valid claims, delay claim processing, or underpay policyholders. While the specific practices may vary across jurisdictions, here are some examples of unfair insurance claim practices:

  1. Denial of valid claims: Insurers may wrongfully deny legitimate claims, either by misinterpreting policy terms, applying unjust exclusions, or using biased interpretations of the facts.
  2. Delayed claim processing: Insurance companies may intentionally delay the processing of claims, often by requesting excessive documentation, unnecessary investigations, or repetitive information, causing frustration and financial hardships for policyholders.
  3. Inadequate investigation: Insurers may conduct insufficient investigations into claims, neglecting to gather relevant evidence or failing to consult experts when necessary, which can lead to unfair claim denials.
  4. Lowballing: This practice involves offering policyholders settlement amounts significantly below the true value of their claims, exploiting their lack of knowledge about their rights or the actual worth of their losses.
  5. Misrepresentation: Insurance companies may misrepresent policy provisions, coverage limits, or exclusions to policyholders, leading them to believe they have coverage when they do not or vice versa.
  6. Unreasonable policy interpretation: Insurers may interpret policy language in an unreasonable manner to avoid paying claims, relying on ambiguous wording or adopting an overly restrictive interpretation.

How to File a Bad Faith Insurance Claim in Illinois

When an insurance company unfairly denies a legitimate claim or acts in bad faith, policyholders have legal recourse to seek justice and compensation. In the state of Illinois, there are specific steps involved in filing a bad faith insurance claim.

Understanding Bad Faith Insurance Claims

In Illinois, bad faith occurs when an insurance company unreasonably denies, delays, or underpays a valid claim. To establish a bad faith claim, policyholders must demonstrate that the insurance company violated its duty of good faith and fair dealing. This means that the insurer failed to fulfill its obligations under the insurance contract, acted dishonestly, or engaged in unfair practices.

Gathering Evidence:

To build a strong bad faith insurance claim in Illinois, it is crucial to gather sufficient evidence to support your case. Some key pieces of evidence to collect include:

  • Policy documents: Obtain copies of the insurance policy, including all endorsements, amendments, and related correspondence.
    Correspondence: Keep a record of all communication with the insurance company, including emails, letters, and phone call logs.
  • Claim documentation: Maintain detailed records of the claim, including the date of loss, relevant receipts, photographs, medical records, and any other supporting documentation.
  •  Expert opinions: If necessary, consult experts, such as independent adjusters or contractors, to provide professional opinions on the claim and the insurance company’s handling of it.

Notifying the Insurance Company:

Before filing a bad faith claim, policyholders should notify the insurance company of their intent to do so. This can be done in writing, clearly explaining the reasons for the claim and the insurer’s alleged bad faith actions. Keep copies of all correspondence for your records.

Consult With an Attorney:

Engaging the services of an experienced bad faith insurance attorney is highly recommended when filing a claim in Illinois. These attorneys specialize in insurance law and can provide valuable guidance throughout the process. They can evaluate the strength of your case, negotiate with the insurance company, and represent you in court, if necessary.

Filing a Lawsuit:

If efforts to resolve the claim through negotiation or alternative dispute resolution methods fail, filing a lawsuit may be the next step. The attorney will prepare the necessary legal documents, such as a complaint, and file them with the appropriate court. The lawsuit should outline the bad faith actions of the insurance company and the damages sought.

How an Attorney Can Help With Bad Faith Denials

While insurance companies have the right to deny coverage under specific circumstances defined within the policy, it is crucial to differentiate between legitimate claim denials and bad faith denial of coverage. When an insurance company acts in bad faith, denying a legitimate claim or engaging in unethical practices, policyholders have the option to seek the assistance of bad faith attorneys. You may be wondering how a lawyer can help solve an insurance dispute.

Bad faith attorneys specialize in representing policyholders who have been unjustly denied coverage or mistreated by their insurance companies. These attorneys have a deep understanding of insurance laws and regulations and can assist policyholders in challenging the denial of coverage. They help policyholders by:

Evaluating the claim. Bad faith attorneys thoroughly review the policy, the claim, and the circumstances surrounding the denial to determine whether the insurance company acted in bad faith.

Negotiating with the insurer. Attorneys skilled in bad faith claims negotiate with the insurance company on behalf of the policyholder, aiming to secure a fair and just settlement.

Filing a lawsuit. If negotiations fail to yield satisfactory results, bad faith attorneys can file a lawsuit against the insurer, seeking compensation for the denied claim, as well as punitive damages for the insurer’s bad faith actions.

Advocating for the policyholder’s rights. Bad faith attorneys act as advocates for policyholders, ensuring that their rights are protected and that insurance companies are held accountable for their actions.

What Damages Are Available for Bad Faith Insurance Claims?

In Illinois, policyholders can seek various types of damages in a successful bad faith insurance claim. If the insurance company has acted in bad faith, you may be entitled to compensatory damages or in some cases punitive damages.

Compensatory damages cover the actual losses suffered as a result of the insurance company’s bad faith actions, including the original claim amount, consequential damages, emotional distress, and attorney fees. Compensatory damages might include both economic and non-economic losses.

In cases where the insurance company’s conduct is deemed particularly egregious, the court may award punitive damages. Punitive damages are a form of monetary compensation awarded to a plaintiff in a legal case that goes beyond compensating for actual losses or injuries. The primary purpose of punitive damages is to penalize the defendant and discourage them from repeating their harmful actions. They are typically awarded in cases where the defendant’s conduct was willful, malicious, or exhibited a reckless disregard for the rights and safety of others. Punitive damages are meant to send a message that such behavior is unacceptable and to deter others from engaging in similar misconduct.

It is important to be aware of the statute of limitations for filing a bad faith insurance claim in Illinois. Generally, the time limit is two years from the date the bad faith actions occurred or were discovered. Failing to file within this timeframe may result in the claim being time-barred.

Chicago personal injury and workers’ compensation attorney Howard Ankin has a passion for justice and a relentless commitment to defending injured victims throughout the Chicagoland area. With decades of experience achieving justice on behalf of the people of Chicago, Howard has earned a reputation as a proven leader in and out of the courtroom. Respected by peers and clients alike, Howard’s multifaceted approach to the law and empathetic nature have secured him a spot as an influential figure in the Illinois legal system.

Years of Experience: More than 30 years
Illinois Registration Status: Active
Bar & Court Admissions: Illinois State Bar Association, U.S. District Court, Northern District of Illinois, U.S. District Court, Central District of Illinois
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