When Your Insurance Company Won’t Pay (And What to Do)

According to a report put out by the Insurance Information Institute, in the first half of 2020, catastrophe-related property and casualty insurance claims totalled $24.7 billion in the United States and non-catastrophe-related claims weighed in at $189.6 billion.

North of the border, the Canadian Life and Health Insurance Association (CLHIA), reports approximately $103 billion was paid out to Canadians with health and/or life insurance benefits in 2020 and, this time reported by the Insurance Bureau of Canada (IBC), consumers received a total of $41.5 billion in 2019 as the result of property and casualty insurance claims.

With all of this money being doled out by insurance companies, you’d think that all claims submitted to them were simply processed and then paid. Well according to CLHIA, most are, but what happens if yours isn’t? What if you submit a claim that you believe is legitimate but are denied by your insurer? The good news is that you still have options to try to get some of that hard-earned cash back.

How to Dispute a Claim

If you’ve gone through your policy cover to cover and can see no reason why your claim was denied—whether it’s a health, life, auto or travel insurance claim—the steps to take to try to get it resolved are the same.

Read: How to Collect a Life Insurance Payout

1. Check and Recheck Your Paperwork
   A claim can be denied simply because you’ve made a paperwork error and not because the insurer is trying to reject your claim. Some information, like an account number or birthdate, can be scanned electronically and if it doesn’t match what’s in the provider’s computers, the claim is refused. Doublecheck what you sent to your provider and if you find an error was made, resubmit the claim with the right information.
2. Pick up the Phone
   If you find that the information you sent was correct and the company is still denying the claim, it’s time to call your insurance provider’s customer service line and get as much information as you can as to why the claim wasn’t paid out or why you didn’t get as much back as you were expecting. If you don’t get answers you’re satisfied with, it’s time to move up the chain and speak to a claims manager.
3. Keep Good Records
   Throughout the process, every time you contact your insurer, keep a detailed record of what was said, who said it and what the next steps are, especially if a claim dispute escalates.
4. Launch a Complaint
   Still can’t get no satisfaction? Most, if not all, insurance companies have a person on staff to handle claim disputes. A policy is a contract, and a complaint liaison is responsible for making sure the policy is executed properly. You might feel like you’re doing nothing but repeating yourself, but the liaison will want as much clear information from you as possible in order to resolve the claim conflict. This is where your detailed list really comes in handy.
5. Go Outside
   Finally, if your insurance company still hasn’t resolved the claim to your satisfaction, the last step is to talk to an impartial party to review the case. An insurance ombudsperson is expected to make an independent decision based on the insurance contract. Before you approach them, ask your insurance company to provide you with a letter stating their position in the case and then file your complaint. In Canada, resolution organizations include General Insurance OmbudService and OmbudService for Life and Health Insurance. In the US, your state's regulator is a good place to turn.

Read: Public Adjusters: Your Insurance Superhero or Unnecessary Expense?

Drug and Health Care Claims

Approximately 29 million Canadians have supplementary health insurance policies, either privately or through their employers, CLHIA reports. It’s no surprise, then, that the bulk of insurance claims made are to a health insurer, whether it’s for braces for your nine-year old or a prescription for an unfortunately-timed UTI.

Generally, these claims are pretty simple: the drug is covered—yes or no—and for a certain percentage (for instance, 80% of the total cost of the medication or treatment). The claim is processed, the money shows up in your account a few days later and you’re done! If this process doesn’t go as smooth as clockwork, though, what stopped the clock?

Before you press that send button to submit your health claim to your provider, first do your homework. If it’s a large expense, particularly if you haven’t submitted a claim for a certain medication, medical supply or dental device to your insurance company before, check with them before you buy.

You may think that a product or service will be covered because something similar was covered before, but this isn’t always the case. Your plan may specify you need a prescription or doctor's note. Some procedures (like extensive dental or orthodontia) may require preauthorization from the insurer.

New drugs and medical equipment can hit the market and be available for purchase, but it may take your insurance company more time to consider whether or not it will be covered than you realized when you decided to buy that spiffy new glucose sensor system or the latest medication to help you stop smoking.

The US health insurance system can seem even more complicated than the Canadian system. Your broker or agent may be able to walk you through some of the ins and outs of the plan. If your benefits are through your employer, there is likely someone in the human resources department that is familiar with the plan or is able to direct you to the customer service line of your insurer.

Read: How to Settle an Insurance Claim Settlement

Final Thoughts

Often, insurance claim complaints can be easily decided simply because a misstep was taken somewhere along the way but, as with all contracts, if you need to take further steps to have it resolved, try to put your rational self ahead of the emotional one, be as clear as possible and deal with just the facts.