My Insurance Company Denied My Claim - Now What?

We all pay our monthly, quarterly or yearly premiums for insurance – whether it be auto, homeowners, an umbrella policy or even our professional liability insurance.  And here in New Jersey, no matter which of these it is, it is expensive!  So when we make a claim, we expect to have coverage in place and for our insurance company to adjust the claim and pay our damages (minus any deductible).  But what do you do when you get the dreaded denial letter stating they will not cover your loss, and your insurance company quotes complicated portions of the policy claiming your particular situation does not fit into the applicable coverages or is specifically excluded from coverage? 

When you receive this denial letter, your first inclination might be to engage in a back and forth with the carrier; or perhaps you get on Google and determine you need your own private adjuster.  We suggest neither route is advisable, and doing so may not just hurt your claim but compromise it altogether.  Instead, consult with a “coverage attorney”.  Coverage attorneys specialize in insurance policy (contract) interpretation and understand the way these policies, inclusions and exclusions, riders and endorsements, interact with one another.  Coverage attorneys have an understanding of the case law interpreting various provisions of the policies upon which carriers often rely to deny claims.  They can tell you how likely you are to be able to procure coverage for your particular loss and set a strategy in place including properly documenting the loss and preserving critical evidence. 

When you make a direct claim against your own insurance carrier, we call these types of claims or cases “first-party actions”.  In other words, you are the insured, are demanding coverage from your own insurance carrier, as opposed to a third party (such as someone you might hit with your automobile) action.

Coverage attorneys are familiar with the law regarding “bad faith”.  Bad faith is a very important concept and a critical tool in resolving first party claims.  When a Court determines that an insurance carrier has wrongfully denied a claim made by their own insured, there is an opportunity to recover attorney’s fees and costs, as well as possible treble damages (an award of three times your damages amount) in certain scenarios.  This is a “tool” because in typical litigation, each party pays its own attorney’s fees and costs so that even if you “win”, you are not made completely whole.  Other tools available to you and your attorney include the New Jersey Unfair Claims Settlement Practices Act or “UCSPA” and/or the New Jersey Insurance Fair Conduct Act (for uninsured and/or underinsured motorists policies).

Dealing with a denial letter timely is critical as is properly documenting all aspects of the claim and claim denial.  Should you need coverage counsel or have coverage questions or concerns, do not hesitate to contact our office.