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Insurance company denied my claim

Updated: Jun 30, 2019


Many people who have their insurance claim denied ask the question- "My insurance company denied my claim, what should I do?" The simple answer is that it depends.


If your insurance company tells you over the phone or in person that they deny the claim, the first thing you should do is ask the insurance company to provide you with a denial letter. The denial letter is a letter from the insurance company denying the claim and sometimes it addresses the reason for the denial. If you are the insured or named insured under the insurance policy, your insurance company should state the reasons for denying the claim in the denial letter.


After receiving and reviewing the denial letter, if you believe that your insurance company denied your claim wrongfully or unreasonably, then you may have a case against your insurance company for breaching the insurance contract and/or for breaching the covenant of good faith and fair dealing, which is also known as bad faith.


In every insurance contract there is an implied covenant of good faith and fair dealing that neither party (insurance company and insured) will do anything that will injure the right of the other party to receive benefits of the insurance contract (Comunale v. Traders & General Ins Co., 50 Cal. 2d 654, 658-659 (1958)). Therefore, an insurance company may not act in bad faith in handling their insured's claim.


There are various ways in which insurance company's wrongfully deny claims. The basic thing to look for is if the denial of the claim was wrongful and/or unreasonable. An insured may have a legal action against the insurance company for breach of the covenant of good faith and fair dealing for varies reasons, including but not limited to if the insurance company either: (list is not all inclusive)


1) Unreasonably or without proper cause withholds policy benefits due to the insured (Gruenberg v. Aetna Ins. Co, 9 Cal. 3d 566, 575 (1973)).


2) Unreasonably fails to properly and thoroughly investigate a claim by or against the insured (Egan v. Mutual Omaha Ins Co, 24 Cal. 3d 809, 819)


3) Wrongfully refuses to defend a claim or settle within policy limits, against a third-party claim (Crisci v. Security Ins Co., 66 Cal 2d 425, 433)


4) Unreasonably engages in abusive practices or conduct that impairs the insured’s right to receive the benefits under the insurance contract (Hughes v. Blue Cross of Northern California, 215 Cal. App. 3d 832, 845-846)


If the denial of your claim by the insurance company does not appear to be wrongful or unreasonable, it is possible that you may still have a valid claim against your insurance company. Insurance company's are experts in insurance law and drafting insurance policies. Therefore, insurance company's also know how to manipulate many of their insured's by wrongfully denying their claim through language of the insurance policy.


In either case, it is not only recommended but crucial that you have an experienced insurance lawyer review your claim to determine if it appears to be handled in bad faith. An experienced insurance lawyer is trained to review claims for any violations in insurance law and any insurance bad faith on the part of insurance companies.


On the other hand, if you are not an insured or a beneficiary under the insurance policy that a claim was made with, you may not have a claim against the insurance company for breach of contract or for breach of the covenant of good faith and fair dealing. If your claim involves other people and/or entities, you may have a case against those other people/entities if they are found to be at-fault for the incident.


Each claim contains specific facts and application of the law varies from case to case.

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