What to Do if Your Insurance Claim is Denied

Filing an insurance claim should be straightforward: you’ve paid for coverage, so when you need it, your insurer steps in. But all too often, policyholders find themselves facing unexpected denials—sometimes for reasons that seem unclear or unfair. Whether it’s a health insurance claim for a necessary procedure, an auto claim after an accident, or a homeowners claim for property damage, a rejection can create financial stress and uncertainty.

Studies show that at least 15% of all insurance claims are initially denied, with even higher rejection rates in areas like health insurance and Medicare Advantage plans. The good news? Many denials can be successfully appealed—but only if you understand your rights and take the proper steps to challenge the decision.

This guide will walk you through the most common reasons for insurance claim denials, how to appeal effectively, and when to seek professional assistance. By knowing what to expect, how to respond, and what preventive measures to take, you can increase your chances of getting your claim approved and securing the coverage you deserve.

Why Insurance Claims Get Denied

Insurers reject claims for various reasons—some valid, others preventable. Understanding the common pitfalls can help you avoid unnecessary delays.

1. Incomplete or Incorrect Information

Even small errors—like a wrong policy number, missing signatures, or incorrect medical coding—can lead to an automatic denial. Fortunately, these mistakes are often easy to fix with a corrected resubmission.

2. Policy Exclusions

Insurance policies contain specific exclusions. Health insurers may deny claims for elective or experimental treatments, while home insurers might reject damage caused by floods or earthquakes unless covered by a rider. Always review your policy carefully to understand what’s included.

3. Missed Deadlines

Each insurance provider enforces strict claim submission deadlines. Health insurance claims typically must be filed within 90 to 180 days of treatment, while auto and homeowners insurance deadlines range from 30 to 60 days.

4. Lack of Medical Necessity

If an insurer determines that a treatment wasn’t medically necessary, your claim may be denied. In these cases, pre-approvals and supporting documents from your doctor can strengthen an appeal.

5. Insufficient Documentation

Lack of proper documentation—such as medical records, police reports, or repair estimates—can lead to claim denials. Keeping thorough records can prevent unnecessary disputes.

6. Lapsed Policy

Non-payment of premiums can result in a policy lapse, meaning you’re no longer covered when you file a claim. Some insurers offer a grace period, but once coverage expires, claims won’t be honored.

Steps to Take If Your Claim Is Denied

A denial letter isn’t the final word. Acting quickly and methodically can increase your chances of a successful appeal.

1. Review the Denial Letter

Insurers must provide a written explanation outlining why your claim was rejected. Identify whether the denial was due to missing information, an administrative error, or a policy exclusion.

2. Cross-Check Your Policy

Compare the denial reason with your insurance policy’s terms. If your insurer states a service isn’t covered, but your policy says otherwise, this could be strong grounds for an appeal.

3. Contact the Insurance Company

A quick phone call can help clarify misunderstandings. Ask for a detailed explanation and find out what documents are needed to support an appeal.

4. Gather Supporting Documentation

If your claim was denied due to missing information, collect all necessary paperwork—such as medical records, invoices, and expert opinions—before resubmitting.

5. Check Appeal Deadlines

Most insurers require appeals within 30 to 180 days of a denial. Filing late can lead to an automatic rejection, so act promptly.

How to Appeal an Insurance Claim Denial

A well-prepared appeal increases your chances of getting a denial overturned. Follow these steps to build a strong case:

Step 1: Submit a Formal Appeal Letter

Your appeal letter should include:

• Your name, policy number, and claim number
• A request for reconsideration
• A clear explanation of why the denial was incorrect, citing policy details if applicable
• Supporting documents (e.g., medical records, repair estimates, police reports)
• A request for a written response within the insurer’s stated timeframe

Send the appeal via certified mail or an email with delivery confirmation to ensure proof of submission.

Step 2: Follow Up

After submitting your appeal, follow up with your insurer within the expected review timeframe. Health insurers, for example, must respond within:

• 30 days for pre-service claims
• 60 days for post-service claims
• 72 hours for expedited cases

Step 3: Request an External Review

If your internal appeal is denied, you can escalate the case to an independent reviewer. Health insurance appeals, for instance, can be reviewed under the Affordable Care Act, requiring insurers to accept an external decision.

Step 4: File a Complaint with Your State’s Insurance Department

If you’ve provided strong evidence and your appeal is still denied, contact your state’s Department of Insurance. Regulators investigate unfair claims handling practices and may pressure insurers to reconsider.

What If Your Appeal Is Denied?

Even after exhausting your insurer’s internal appeals, you still have options.

Request an External Review

An independent third party can reassess your claim. Health insurance denials involving medical necessity or experimental treatments are eligible for this process.

Consult an Insurance Attorney

If your insurer refuses to honor a valid claim, an attorney specializing in insurance disputes can evaluate whether they acted in bad faith—and if necessary, take legal action.

Explore Alternative Dispute Resolution

Mediation or arbitration can be alternatives to filing a lawsuit. Some insurance policies require disputes to be settled through arbitration instead of court proceedings.

Pay Out-of-Pocket and Seek Reimbursement

For urgent medical treatments or repairs, you may need to cover costs upfront while pursuing reimbursement. Keep all receipts and documentation for future claims.

How to Prevent Future Claim Denials

Taking proactive steps can reduce the risk of claim denials:

• Double-check claim submissions for accuracy.
• Submit claims on time to avoid missing deadlines.
• Maintain organized records of policies, payments, and claim documents.
• Review policy changes annually to stay informed about new exclusions.
• Obtain pre-approvals for treatments requiring prior authorization.
• Work with an insurance advocate or broker to clarify coverage limits.

When to Seek Professional Help

Not every claim denial requires professional intervention, but some situations call for expert assistance.

Hiring an Insurance Claims Advocate

Claims advocates specialize in complex disputes, particularly for health and disability claims. They can guide you through appeals and negotiate with insurers on your behalf.

Consulting a Legal Professional

If an insurer engages in unfair practices—such as unjustified delays or misinterpreting policy terms—an attorney can help challenge their decision in court.

Filing a Complaint with State Regulators

If an insurer repeatedly denies claims without valid reasoning, state regulators can investigate and enforce consumer protection laws.

Conclusion

Dealing with a denied insurance claim can be frustrating and time-consuming, but understanding your rights and taking the right steps can improve your chances of success. Many claim denials result from clerical errors, missing documentation, or misunderstandings, which can often be corrected through internal appeals. If an insurer upholds its denial, you may have the option to escalate the dispute through an external review, state regulators, or legal action.

Persistence is often key when dealing with insurance claims. Many initially denied claims are later approved upon appeal, especially when policyholders provide strong evidence and clear arguments. By staying informed, keeping records, and seeking help when necessary, you can navigate the claims process effectively.

FAQs

What are the most common claim mistakes that lead to denials?

The most frequent mistakes that lead to claim denials include:

1. Incomplete or incorrect information – Missing details such as incorrect policy numbers, misspelled names, or incomplete medical records can result in automatic rejection.
2. Failure to meet deadlines – Submitting a claim outside the allowed timeframe can lead to an automatic denial, even if the claim is valid.
3. Lack of required documentation – Claims often require supporting documents, such as medical records, receipts, or repair estimates. Failure to provide the necessary paperwork can result in denial.

What are my chances of winning an appeal?

Over 50% of denied health insurance claims are overturned when supported by strong evidence.

How long do I have to appeal?

Deadlines vary by insurer, but health insurance appeals typically must be filed within 180 days, while auto and homeowners insurance appeals have a 30- to 60-day window.

Always check your denial letter for the specific deadline set by your insurer.

What should I do if my insurer keeps denying my claim?

If your claim is repeatedly denied despite strong supporting evidence, consider:

• Requesting an external review by an independent third party.
• Filing a complaint with your state’s Department of Insurance.
• Consulting an insurance lawyer if you suspect bad faith or illegal practices.
• Seeking assistance from a Consumer Assistance Program (CAP) if available in your state.