What If the Claims Adjuster Denies Coverage?

A look at your options when the insurance company says your injury isn't covered under the policy.

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If you file an injury claim with an insurance company -- whether your own or the other party's insurance carrier -- a claims adjuster might contend that the insurance policy involved does not cover your accident. The reasons given might be:

• the policy lapsed

• the nature or location of the accident was not covered -- particularly if it is a home­owner’s policy

• the person who caused the accident is not covered, or

• you do not qualify to make a third-party claim under your state’s no-fault vehicle insurance law.

An adjuster’s contention that there is no ­coverage does not end settlement negotiations. Instead, the coverage question simply becomes one more element in your negotiations.

First, ask the adjuster to give you a written expla­nation of the insurance company’s reasons for claiming there is no coverage, including references to the specific policy provisions that limit coverage. This will reveal whether the adjuster is just bluffing and will give you a chance to respond to the reasons more specifically.

If the adjuster does not agree to give you a written explanation, write a letter to the adjuster confirming your conversation, the denial of ­coverage, and the adjuster’s refusal to explain in writing. This letter may pressure the adjuster to give you the infor­mation, because an insurance claims supervisor will not like having such a letter in the insurance company’s file. If you eventually go to the insurance commission or file a lawsuit to pursue your claim, the presence of this kind of letter in the claim file would show the insurance company’s lack of ­cooperation.

If the other side's insurer is denying coverage, ask the claims adjuster to provide you with a copy of the insured’s policy -- or at least the por­tions on which the adjuster relies in ­denying coverage -- so that you can read it for yourself. If the adjuster refuses, write a letter to the adjuster con­firming the refusal so that it becomes a part of your claim file. Then, if the adjuster still refuses to negotiate with you about settlement, you will have to use other pressures to get negotiations moving.

In many cases, an adjuster will initially contend that there is no coverage. As soon as you indicate that you will not abandon your claim, however, the adjuster will begin to negotiate a settlement anyway. If, after that, you cannot reach a satisfactory settlement because of the coverage question -- or any other prob­lem -- you will have to move into other negotiating strategies.

If the adjuster seems to you to be correct that there is no coverage at all and refuses to negotiate for a settlement, you may be able to turn to insurance that covers someone else responsible for the accident. For example, suppose you file a slip and fall claim after you tripped on a cracked sidewalk, and the city claims there is no coverage because sidewalk maintenance is the legal responsibility of each property owner. You could then file a claim against the insurance company for the owner of the property fronting the sidewalk.

Don't Be Swayed by a "Lawyer's Letter"

In claiming that there is no insurance coverage for your accident, an adjuster may tell you that "the lawyers" have said there is no coverage. The adjuster may even send you a copy of a letter from a company lawyer echoing that "fact". Do not be impressed. A company lawyer's opinion that there may not be coverage for your accident is no more binding than anyone else's opinion. Whether or not there is coverage depends on the terms of the policy, and a policy can often be read in several different ways, depending on the facts. If the matter goes to court, ambiguities in a policy are often resolved in favor of coverage. Bottom line: The lawyer's opinion doesn't resolve the matter.   

More Information on Injury Claim Negotiation

You'll find a lot more details on negotiating an injury claim -- plus strategies for dealing with an insurance company that is refusing your claim -- in How to Win Your Personal Injury Claim, by Joseph L. Matthews (Nolo).

Updated by: , J.D.

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