Why Do Insurance Companies Deny & Delay Claims: 11 Most Common Reasons
Reasons Of Claim Denial
It’s a job of every insurance company to raise their year end profit (after all expenses), give bonuses to their employees, pey hefty salary packages to their CEO’s and make more sale. They use every marketing tactics to lure customers by offering discounts, guarantee timely approval of claims and more. One of the most common strategy to achieve this is to deny insurance claims so that they can increase their revenue. Listed below are the most common reasons for claims getting denied although reasons may vary depending of the type of insurance claimed.
- Claims are filed too late: Amongst the many reasons of why insurance claims are rejected, the most common one is policy holders are too late to file a claim. Not acting quickly and filing after deadline; will delay the process of receiving the money in some cases and also creates doubt in the mind of insurer.
- Not disclosing all the important / relevant information: Many a times, especially health history; people don’t report details of previous medical illnesses. Suppressing the facts while purchasing the cover is the major reason why insurance claims are denied.
- Loss of policy documents: Claims are rejected if person loses the policy.
- Lying While Claiming: Many a times, people inflate their bills or claims are not reported dishonestly. For e.g. in case of car insurance; if you’re the reason for the accident, be honest and disclose the facts to avoid rejection or facing the penalties. Claiming honestly can speed up your process and avoids complexity. So always accept your fault.
- Failure to provide sufficient evidences: Providing this adds value to your claim. If you don’t submit as many proofs of the damage (for e.g. taking snapshots of the damage, surroundings, keeping receipts as a proof of ownership etc). as possible the process can get delayed resulting in rejection.
- Claims lost by insurer: With heap of claims lying at the company; there is a possibility that your claims is lost and hence is not reported in their database which leads to the denial. In such cases, the only solution left with the policy holder is to take speedy action before the deadline for filing passes.
- Not informing the company about the new changes: Claims often get invalidated when company is not notified in before any alterations are done by the policy holders. For e.g. damage to car is first repaired and then insurers are notified.
- Poor follow-ups: Once claim is made, people don’t make a follow-up, keep a record of their communications which causes claims process slow down.
- Plan not applicable to other state: If the plan doesn’t include applicable state then this causes claims rejection.
- Terms and conditions are not read before selecting any policy: People fail to realize that what they’ve claimed is practically not covered in the policy.
- Listening to agent, hiding the facts, filling incomplete details: Often, insurance agents force/ask people to incorrectly/partly enter information in the application. Motive of doing this can be anything – too lengthy form fill-up which is cumbersome since agent has to do this on his own, sales deadline, long list of customers to attend in a single day etc..