Insurance claim denied: how to read the letter and your options

Start with the letter. Find the reason, find the policy wording it relies on, and ask in writing for anything that is missing. What you do next depends on whether the insurer says the loss is not covered at all, or only disagrees with you about the facts.

How do you read a denial letter?

Look for five things:

1. Whether the whole claim was denied, or only part of it.
2. The reason, in the insurer’s own words.
3. The policy section it relies on. This may be an exclusion (a part of the policy that lists what is not covered) or a condition (something the policy requires you to do).
4. The facts behind the decision, such as the adjuster’s inspection or an engineer’s report.
5. Any dates, and any review steps the insurer offers.

If you were told by phone, the NAIC, the association of state insurance regulators, advises asking for the denial in writing. Some states require it. In Texas, a written rejection must state the reasons. In California, a denial must be in writing and list every basis for it, and the California Department of Insurance says it must tell you that you can ask the department to review it.

Then read the cited section in your full policy, not only the summary page. Include the endorsements, which are pages that change the standard policy. If you do not have the full policy, ask the insurer or your agent for a complete copy.

What reasons do insurers give?

Excluded cause. The Texas Department of Insurance says the most common reason for a denial is that the policy does not pay for that type of damage. It gives flooding and rodent or insect damage as examples. The NAIC notes that floods and earthquakes are not covered by a typical homeowners policy.

Wear and tear. The insurer says the damage comes from age or upkeep, not from a sudden event. This is a dispute about facts. Evidence you can gather includes dated photos from before the loss, repair records, and a written opinion from a contractor or engineer you choose.

Late notice. The insurer says it was told about the loss too late. State law can set a limit as well. In Florida, a property claim is barred unless notice is given within one year after the date of loss.

Missing documents. The insurer says you did not send something it asked for, such as a proof of loss (a formal, signed statement of what you are claiming) or a list of damaged items. Ask exactly what is missing, send it, and keep proof of the date.

Under the deductible. The Texas department gives the example of $5,000 in repairs against a $10,000 deductible. The claim closes with no payment. That is a question about the amount, which is covered in what to do when the offer is too low.

What can you request in writing?

United Policyholders, a nonprofit, publishes a sample letter that asks the insurer for two things and requests a reply within a week:

• The exact wording of the policy language it is relying on.
• Complete copies of all evaluations, reports and estimates prepared about your property and claim.

You can also ask for the adjuster’s report and photos, any engineer’s report, and a complete copy of the policy. What an insurer has to hand over differs by state. In Florida, the insurer must send you a copy of any detailed estimate within 7 days after its adjuster creates it.

Keep every request and reply together. What to do when your claim is taking too long explains how to keep a claim log.

What are the paths forward after a denial?

None of these comes with a promised result. They are listed from least to most costly.

1. Ask the insurer to reconsider. Send new evidence that answers the stated reason. The Texas department suggests explaining why you disagree and sending supporting documents.
2. File a complaint with your state insurance department. It is free. In Texas, the department can ask the company to review its decision, but it cannot decide whether a storm or normal wear caused the damage.
3. Ask about mediation. Florida’s program takes disputes over what caused the damage, but not claims where the cause of loss is not covered by the policy. North Carolina runs mediation after a declared disaster, and a request is due within 60 days after the denial.
4. Check whether appraisal fits. Appraisal decides the amount of a claim, not whether the policy covers it. It may fit if the real disagreement is over how much damage there is.
5. Talk to a public adjuster. A public adjuster can inspect, document the cause and the cost, and negotiate with the insurer for a fee. A public adjuster cannot give legal advice. Florida and Texas both say so in statute. The directory includes a license check, and the two-minute quiz covers whether one fits your claim.
6. Talk to an attorney. A dispute about what the policy words mean, or a lawsuit, is legal work.

If the denial is on a federal flood policy, the Texas department notes there is a separate appeal process.

Public adjuster vs attorney vs appraisal compares cost and limits for each route.

Which deadlines matter after a denial?

• Lawsuits. Time limits to sue can run out. United Policyholders suggests talking to an attorney at least a month before the one-year anniversary of the loss.
• Mediation. Programs can have short windows, like North Carolina’s 60 days.
• Appraisal. The Texas department advises checking your policy for any deadline to demand it.
• Further claims. Florida sets one year for a reopened claim and 18 months for a supplemental claim, both counted from the date of loss.

These differ by state and by policy. The state pages list the rules where you live.