Understanding Insurance Claim Denials
Having insurance provides peace of mind in the face of unexpected events, such as car accidents, severe illnesses, home damages, or even total loss of property. However, the National Commission for the Protection and Defense of Financial Services Users (CONDUSEF) reports an average of 66,000 consumer complaints to insurance companies each year. Only 30-40% of these complaints are resolved in favor of the consumer, with life and property damage insurance claims being more common.
Common Reasons for Claim Denial
Teresa Yáñez, Director of Claims at GMX Seguros, identifies two types of reasons for claim denial: basic and technical.
- Basic reasons: These are obvious issues like an expired policy, a paid premium not reflected in the policy, or other administrative problems.
- Technical reasons: These occur when a claim happens with an active policy but isn’t covered, such as exceeding the deductible amount or when a third-party claim arises where the policyholder isn’t liable for damages.
Additional technical reasons include uncontracted or undocumented coverage, discrepancies between the adjuster’s and policyholder’s damage assessments, or outstanding third-party claims.
How to Avoid Claim Denials
According to CONDUSEF, the primary reason for the low percentage of favorable resolutions in this sector is the lack of understanding of policy terms and conditions by consumers when purchasing insurance products.
- Read your policy: Understand the contract and terms & conditions you’re signing with the insurance company. Ensure all agent-promised offerings are documented.
- Know policy operation: Be clear on how the policy functions during a claim event.
- Promptly report claims: Report damages to your insurance company immediately after an incident. Delaying or hiding details can lead to claim rejection.
One common reason for denial is an expired, unpaid, or bounced-check policy. In such cases, ensure timely and proper payment to the insurance company.
For salary deduction payments, if you can prove payment was deducted, your policy is likely valid despite the company’s lack of notification to the insurer.
Lastly, CONDUSEF advises staying vigilant about policy validity and not ignoring renewal or overdue notifications via phone calls or emails.
Key Questions and Answers
- Q: Why are insurance claims often denied?
A: Common reasons include expired policies, unpaid premiums, technical non-coverage of specific incidents, and discrepancies in damage assessments.
- Q: How can I avoid having my claim denied?
A: Read and understand your policy, report claims promptly, ensure timely payments, and stay informed about policy validity and renewal notifications.
- Q: What should I do if my policy has expired?
A: Ensure timely and proper payments to the insurance company. For salary deduction payments, prove payment was deducted if the company failed to notify the insurer.
