What should I do if I think my insurance company denied my claim unfairly?

We buy insurance so that we can be covered when life takes an unexpected turn. We buy it and hope we never have to use it. But when we do, we expect to be protected. After all, it's what we paid money for during all those years.

The claims process is naturally a very stressful time for people. Not only do they have to deal with the impact of a loss in their personal lives – whether it's a medical emergency, stolen property, a car accident, or the death of a loved one – they also have to deal with paperwork and the numerous parties involved in processing a claim. At the end of all that, no one wants to hear that their claim has been denied.

If this has happened to you, the first thing you should do is remain calm. While you might feel frustrated or angry, remember that your best course of action is to explore your options in a rational way.

If you think the claim was denied unfairly, there are two ways you can deal with it: file an appeal with the insurance company or take legal action against them.

Filing an appeal with your insurance company (often called an internal appeal) is a relatively straightforward process. Each company will have its own procedures, and it might involve several levels of appeals, but it generally requires you to simply provide them with some information they might not have had when processing your claim or had overlooked when making their initial judgment. This gives you an opportunity to voice your reasoning and explain why you think your claim should not have been denied.

While an appeal is generally the recommended first step, it is not required. You can file a lawsuit against your insurance company for a denied claim, either right away or after trying an appeal. But be careful if you wait; there is usually a one- or two-year deadline for filing legal action against your insurance company.

In order to avoid or reduce the chances of a denied claim, always speak with your broker before filing one. They can go over the policy coverage and conditions to make sure you are prepared when dealing with your insurance company (for more advice on dealing with claims, see How to File a Claim that Gets Paid Sooner).