INSURANCE CLAIM REJECTED? WHY IT HAPPENS AND WHAT TO DO

An insurance claim may be rejected when the circumstances fall outside the policy’s cover, an exclusion applies, required information is missing or inaccurate premiums or cover aren’t in order, or a policy condition hasn’t been met. The exact reason for the rejection will depend on the insurer, the wording of the policy and the circumstances surrounding the claim.

Seldom do we stop to consider why an insurance claim might be denied, what our policy terms say about claims, or what to do when a claim is rejected – until we find ourselves at that very crossroads. Then having an insurance claim rejected suddenly feels as if being hit by an unexpected roadblock, especially when you’re counting on your insurance to help you navigate the financial impact of an unexpected event.

Here is what you need to know about how insurance claims work, from submitting a claim to receiving an outcome.

Why Would An Insurance Claim Be Rejected?

An insurance claim may be rejected when it doesn’t fall under the policy’s cover, an exclusion applies, information is missing or inaccurate, premiums aren’t in order, or a policy condition hasn’t been met.

Missing documents, insufficient evidence, late notification or an event that isn’t covered can also put the brakes on settling a claim.

Common Reasons Why Insurance Companies Deny Claims

These are some of the reasons why insurance companies deny claims:

The Claim Falls Outside Your Cover

Policies cover specific risks up to defined limits. If an event occurs outside these defined parameters, such as pre-existing conditions or unlisted drivers, the claim may be declined. This is what makes understanding your policy wording important. They explain what’s covered, what’s excluded and what you need to do to maintain cover.

Important Information Is Missing Or Incorrect

Inaccurate details provided during a policy setup or a claim submission can lead to rejection. Proper record-keeping and fact checking are critical. If something has changed (for example, how a vehicle is used or who regularly drives it), check whether your insurer needs to be informed.

Policy Conditions Were Not Met

Every insurance policy has conditions – specific responsibilities that need to be followed to keep your cover on track. Depending on the type of insurance, these could include paying your premiums on time, taking reasonable precautions to prevent or reduce loss, reporting an incident within a specified period, or providing the information and evidence needed to assess a claim.

Failing to comply with these conditions can lead to a rejected claim.

What Happens If Your Insurance Claim Is Denied?

If your insurance claim is denied, start by reading the insurer’s rejection or decline communication carefully. Look for the specific reason and, where provided, the policy clause on which the decision is based.

Here’s what to do when a car insurance claim is rejected:

1. Check the relevant section of your policy wording.
2. Gather supporting documents, photographs, correspondence and other evidence.
3. Compare the information with the reason given for the decision.
4. Contact your insurer if you need clarification.
5. If appropriate, use the insurer’s internal complaints process.

Understanding what led to the rejection helps you work out where things took a wrong turn and what steps you can take next.

How To Dispute A Rejected Insurance Claim

If you believe your claim has been incorrectly rejected, you can ask the insurer to review the decision by following this concise dispute process:

Step 1: Ask For The Reason In Writing.
Make sure you understand why the claim was declined and which policy term applies.

Step 2: Review Your Policy.
Check the wording, exclusions, limits and conditions relevant to the incident.

Step 3: Gather Your Evidence.
Keep copies of reports, invoices, photographs, emails and anything else that supports your position.

Step 4: Use The Insurer’s Complaints Process.
Give the insurer an opportunity to review and respond to your complaint.

Step 5: Escalate If Necessary.
If the matter remains unresolved, you may be able to approach an appropriate independent dispute-resolution body, such as the National Financial Ombud Scheme South Africa, depending on the type of complaint and its jurisdiction. The Financial Sector Conduct Authority complaints guidance can help you escalate rejected claims through the right channels.

What If A Third-Party Insurance Claim Is Denied?

If a third-party insurance claim is denied, depending on the circumstances, you can challenge the decision with the insurer, escalate your complaint to the relevant industry ombudsman, or consider pursuing a civil claim directly against the person responsible for the damage.

A third-party claim may be denied for several reasons including:

• The parties may disagree about what happened, who was responsible, or how the incident occurred.
• The policy may have lapsed, premiums may not have been paid, or the policy may not have been valid at the time of the incident.
• The circumstances may fall within an exclusion or involve a breach of a policy condition, such as an unauthorised driver or driving under the influence of an illegal substance.

If your third-party claim has been denied, follow these steps:

• Request a clear explanation of why the claim was rejected and, where applicable, the policy wording or clause supporting the decision.
• Keep relevant documentation together, including photographs, police or accident reports, repair estimates, correspondence and witness details.
• Follow the insurer’s formal complaints or dispute process and provide any additional information that may help them review the decision.
• Approach the NFO, if you remain dissatisfied after completing the insurer’s complaints process.
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• Depending on the circumstances, you may need to consider a civil claim against the person responsible for the loss.

How To Reduce The Risk Of Claim Problems

Understand Your Cover Before You Need To Claim

Knowing your cover before something goes wrong can prevent unpleasant surprises. Take time to understand exclusions, limits, excesses and your responsibilities under the policy.

For example, if you have pet cover, understanding how excess works on pet insurance claims can help you understand what you may be responsible for when making a claim.

Be Thorough When You Submit Your Claim

Provide complete and accurate information and submit the supporting documents requested by your insurer. Keep copies of everything you send, including claim forms, photographs and correspondence.

If you’re unsure whether something is relevant, ask rather than leave information out.

Do Online And Digital Insurance Platforms Speed Up The Claim?

Online and digital insurance platforms can speed up the claims process by making it quicker to submit information, upload evidence and track progress. Instead of sitting through the call-centre queue and listening to hold music, you can often start a claim online, whenever it suits you. Digital claims platforms may offer:

• Faster submission: file a claim 24/7 using a mobile app or website.
• Immediate evidence uploads: snap photos or videos of the damage and upload these right away.
• Easier tracking: check the status of your claim online at any time.

However, faster submissions do not necessarily mean faster assessment or payment. The speed of the overall process can depend on the type and complexity of the claim, as well as whether everything required has been submitted correctly or if the insurer may still need to investigate the claim.

Whichever route you use, your policy terms still apply. Clear evidence and accurate, complete information can help keep your claim on track.

Know Your Policy Before You Need To Claim

Remember: a declined claim doesn’t have to be a dead end. Start by understanding why the claim was declined and what your policy says. Once you know where the roadblock is, you can understand beter what steps you may be able to take next.

If you’re a dotsure.co.za customer, you can manage your policy online and read up on your policy wording. If you need help understanding your options or policy details, always feel free to contact us.