What Should I Do If My Property Insurance Claim Has Been Denied?

Commercial property insurance provides coverage for the physical location and goods of a firm against incidents that could result in severe financial losses. This policy protects the insured business against theft, vandalism, water and fire damage, and a variety of natural disasters that can cause significant setbacks. Depending on the scope of coverage, commercial property insurance will cover the replacement of damaged property and can be used to compensate the firm for income loss.

When managing claims, particularly commercial property insurance claims, insurance companies should act in good faith. By law, insurers are expected to examine claims thoroughly and pay them promptly in a manner that does not impede the insured's ability to enjoy policy benefits. To fulfill this commitment to behave in good faith, the insurer must adhere to specific obligations. These can include the obligation to communicate adequately and truthfully with the insured on their claim and to adhere to claim deadlines. Insurers operate in bad faith if they fail to fulfill their obligations for unreasonable or improper reasons.

When a commercial insurance claim is refused, business owners may ponder their choices and how to properly recoup from a significant loss. Fortunately, there are a number of actions policyholders can take to appropriately manage a claim denial and get closer to receiving their due reimbursement.

Examine Each Claim Notification

Reviewing all notifications on the claim and correspondence with the insurance provider is one of the most critical things to perform during and after a claims investigation. Some messages may specify whether the claim has been fully paid, partially paid, postponed, or denied. The carrier must provide advice on how to resubmit or appeal a contested claim. In the case that the claim is partially paid or denied, the insurer's notification shall include an explanation of the reason(s).

File an Appeal

A policyholder can appeal a claim denial based on the carrier's standards if they believe the denial was unlawful. During this process, it is essential for the insured to know the exact facts required for the appeal. This is due to the fact that appeals procedures might differ based on the insurer and state insurance legislation.

The reason a claim is denied is frequently more nuanced and open to interpretation than one might initially believe. This is particularly true for sophisticated property losses covered by a business property insurance policy.

An appeal should include a rationale for the appeal as well as the appropriate supporting paperwork, such as a copy of the original claim and copies of all pertinent correspondence with the insurer. Introducing any fresh facts or findings regarding the claim or cause of the damage might also aid the appeals procedure. Details that were not previously known or that were uncovered by employing an impartial public adjuster and/or legal counsel are examples of new information. Providing this information while arguing why the claim should come under the limits of the policy might raise the likelihood that the appeal will be accepted.

It may be necessary to file multiple appeals to alter the insurance company's judgment or force a complete reexamination of the claim. Important to demonstrate to the insurer that the policyholder is determined to resolve the claim only after receiving the correct payment is persistent.

Consult Legal Counsel

Although legal representation can be hired at any moment, it is especially vital in the event that a claim is denied. Denials of valid commercial property insurance claims are an unwelcome reality for many business owners. Due to their for-profit business model, insurance companies are likely to act in their own best interests regardless of the legitimacy of a claim. By refusing, delaying, and underpaying claims, insurance companies generate a profit.

Your legal counsel must provide conclusive evidence that the harm should have been covered by the policy and that the claim was purposefully paid at a lesser amount or delayed without reason. Your attorney should send a strong demand letter that complies with Texas's statutory requirements and demonstrates that the specific loss is covered by the policy terms and that the insurance company failed to investigate properly, misled the insured about the policy itself, and/or took unfair actions to avoid compensating the policyholder as required by the policy.