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When you file an insurance claim, you expect your policy to deliver on its promise: financial help when you need it most. Yet every year, thousands of policyholders are shocked to discover their claims are delayed, underpaid, or denied outright.
On a recent episode of Insurance Hour, host Karl Susman explained the most common reasons insurance claims are rejected and the exact steps consumers can take to challenge a denial. Drawing on decades of experience in California’s volatile insurance market, he broke down the truth behind “full coverage,” how insurers evaluate losses, and what real options you have when something goes wrong.
Why Insurance Claims Are Denied in the First Place
Before you can successfully challenge a denial, you must understand why it happened. Most denied claims fall into a few predictable categories.
Coverage Gaps and Exclusions
Insurance only covers specific “sudden and accidental” events. Fire, theft, or collision may be covered, while wear and tear, flooding, or mechanical breakdown usually are not.
“Insurance covers sudden and accidental events,” Susman explained. “It doesn’t pay for things that break down over time.”
Policy Lapses or Missed Payments
If a premium is missed—even briefly—a claim can be denied. Insurers must provide notices before cancellation, but those notices are often overlooked.
Misrepresentation or Missing Information
Failing to disclose prior losses, business use of a vehicle, or rideshare activity can lead to claim rejection later.
“Honesty up front saves you a nightmare later,” Susman warned.
Poor Documentation
Without photos, receipts, police reports, or witness statements, adjusters may not have enough proof to approve a claim.
The Dangerous Myth of “Full Coverage”
One of the most common misunderstandings is the idea of “full coverage.”
“There is no such thing,” Susman said. “Most people think it means they bought everything, but it still doesn’t cover everything.”
For auto policies, “full coverage” usually means liability, collision, and comprehensive only. It often excludes:
- Gap coverage for financed vehicles
- Rental reimbursement
- Uninsured or underinsured motorist property damage
- Medical payments or personal injury protection
For homeowners, “full coverage” may still exclude earthquake, flood, or sewer backup. The phrase provides false comfort. The only real protection is a detailed annual policy review.
What to Do Immediately After a Loss
What you do in the first few hours after a loss can determine whether your claim succeeds.
- Document everything immediately. Take photos and videos from multiple angles and write down what happened.
- Report the loss promptly. Delayed reporting can jeopardize coverage.
- Prevent further damage. Policies require you to mitigate additional loss, such as boarding up windows or stopping leaks.
- Save all receipts. Emergency repairs and temporary housing may be reimbursed.
“Treat your claim like a business transaction,” Susman advised. “Emotions are understandable, but paper trails win disputes.”
How the Insurance Claims Process Works
Once a claim is filed, it moves through a structured process:
- Acknowledgment: You receive a claim number and an assigned adjuster.
- Investigation: The adjuster gathers documentation, photos, and statements.
- Evaluation: Policy terms are compared to the loss details.
- Resolution: Payment is issued, more information is requested, or a denial is sent.
A denial letter must cite specific policy language. That language becomes the foundation of your appeal.
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Step-by-Step Guide to Appealing a Denied Claim
If your claim is denied, Susman advises a methodical approach.
Read the Denial Carefully
Identify the exact clause the insurer relied on. Many denials arise from misunderstanding, not bad faith.
Gather Supporting Evidence
Collect contractor estimates, expert opinions, time-stamped photos, and additional documentation.
Submit a Formal Written Appeal
Reference the relevant policy language, explain why the denial is incorrect, and include all evidence. Send it via certified mail.
Request Internal Escalation
Ask for a supervisor or claims manager review. Many disputes are resolved at this stage.
File a Complaint with the Department of Insurance
In California, the California Department of Insurance (CDI) can investigate unfair claims practices.
“The DOI won’t act as your lawyer,” Susman noted, “but their involvement often speeds things up.”
Why Your Agent or Broker Matters During a Claim
A good agent doesn’t disappear after the policy is sold. Independent agents can:
- Interpret policy language
- Communicate with adjusters on your behalf
- Confirm what was disclosed at binding
- Identify missing endorsements
- Help locate alternative coverage after a denial
“Good agents don’t disappear after the sale,” Susman said. “They’re there when the claim hits the fan.”
Common Situations That Trigger Claim Problems
During the episode, Susman addressed frequent real-world scenarios that lead to claim issues:
- Rideshare driving without endorsement: Most personal auto policies exclude commercial use.
- Hit-and-run accidents: A police report and proof of contact are often required.
- High-risk area homeowners: Wildfire and flood zones face tighter underwriting and frequent non-renewals.
- Premium increases after one claim: Insurers rate based on recent loss activity, not long-term history.
Your Legal Rights as a Policyholder
Every state enforces versions of the Unfair Claims Settlement Practices Act. Insurers are required to:
- Acknowledge claims promptly
- Conduct reasonable investigations
- Provide written explanations for denials
- Pay undisputed amounts quickly
If you experience unreasonable delays or undervaluation, document every interaction. You can escalate through the Department of Insurance or consult an attorney specializing in insurance law.
How to Prevent Future Claim Denials
Susman recommends several proactive steps to reduce future claim problems:
- Review your policy at every renewal
- Bundle policies for stronger underwriting stability
- Raise deductibles to limit nuisance claims
- Install fire, water, and security mitigation systems
- Avoid filing small claims when possible
- Update coverage after major life changes or renovations
- Keep a digital inventory of your belongings with receipts
“Insurance isn’t just paperwork,” Susman said. “It’s a partnership. The time to build that partnership is before something goes wrong.”
Final Takeaway: Denials Are Often the Start, Not the End
A denied claim doesn’t always mean the end of the road. In many cases, it simply means more documentation, clarification, or persistence is needed.
“Most claims can be fixed,” Susman concluded. “You just need to understand your policy, document your loss, and stay persistent.”
In today’s insurance market—shaped by disasters, inflation, and regulation—knowledge is your strongest coverage. Read your policy, ask questions, and work with professionals who treat insurance not as a transaction, but as a promise. When that promise is challenged, you’ll know exactly how to fight back.
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