Can an Insurance Company Deny Coverage?

Can an Insurance Company Deny Coverage?

Did your insurance company deny coverage for a claim that should have been covered under the terms of your policy? If so, you may be asking yourself, can an insurance company deny coverage? If your insurance company denied coverage for a claim, and you suffered losses as a result, you may be entitled to compensation. A Reno bad faith insurance lawyer may be able to help you recover money damages if the company canceled your insurance policy without legitimate reasons, denied the existence of a valid policy, or twisted the interpretation of the language in their existing policies to validate their denial. 

What Is a Wrongful Denial of an Insurance Claim?

A wrongful denial of an insurance claim occurs when an insurance company refuses to pay for losses or services that are covered in your insurance policy. Bad faith insurance lawyers see cases arise when: 

  • An insurance company illegally cancels a policyholder’s life insurance, or health, automobile, or homeowners insurance without valid reasons to avoid paying out on a claim or preauthorizing medical treatment.
  • The insurer changes policy terms without the policyholder’s consent to validate their actions
  • An insurer willingly refuses to comply with policy terms
  • The insurance company fails to perform the obligations outlined in the policy
  • An insurer fails to follow established customs of the policy, paying some claims while denying payment for other, similar claims
  • Denies the existence of the policy

What’s the Recourse for the Wrongful Denial of an Insurance Claim?

Insurance companies owe a duty of good faith and fair dealing to the people they insure. Insurers may be held liable if they refuse to honor their contractual obligations. If an insurance company wrongfully denies a valid insurance claim that should be covered in a policy, or otherwise acts in bad faith, and the insured person suffers losses, federal and state insurance laws allow policyholders to file a lawsuit against the insurer. The policyholder has three paths to recovery: (1) Sue the insurance company for the economic damages caused by the denial; (2) Sue to enforce the existing policy; (3) Sue for non-economic losses that happened because the insurance company denied coverage.

What Damages Can Be Recovered if an Insurance Company Denied Coverage for a Claim?

Filing a lawsuit against an insurer for the wrongful denial of an insurance claim allows the victim to recover compensation for any damages suffered because of the insurance company’s acts of bad faith. Damages may include monetary losses like medical bills, repair costs, or lost wages, non-economic losses like pain and suffering and emotional trauma, and punitive damages to punish the wrongdoer.