Why Was My Insurance Claim Denied? Unpacking Common Insurance Claim Rejections

Nobody expects their insurance claim to be denied. Understanding why claims get rejected helps you avoid these problems and know your options when denials happen.  

The Top Reasons Claims Get Rejected 

• Your Policy Doesn't Cover It: Every insurance policy specifies what it covers and lists exclusions, or situations where coverage doesn't apply. For example, your homeowners policy might exclude flood damage, or your auto policy might not cover commercial use of your personal vehicle. 

  Homeowners policies typically exclude flood damage, which requires separate flood insurance. When flooding occurs, claims filed under standard homeowners policies are denied based on this exclusion. Take time to read your policy's exclusion section. If the language seems confusing, ask your insurance agent to explain what's covered and what's not. 

   

• Missing or Incomplete Paperwork: Insurance companies need documentation to verify claims. Missing a police report, medical records, or ownership paperwork can result in a delay [1]. 

  When required documentation is missing, such as title paperwork for a total loss vehicle claim, the claim may not be paid until vehicle ownership is verified. Once the missing documentation is provided, the claim can be reconsidered. 

  There may also be contractual or statutory deadlines for presenting claims. Missing these deadlines, even by a day, can result in denial. 

   

• Incorrect Information on Your Application: When you apply for insurance, the information you provide becomes part of your contract. If the insurance company discovers incorrect information later, they may deny claims based on "material misrepresentation" [2]. This doesn't always mean fraud. Maybe you forgot to mention a previous accident or didn't update your address. However, these omissions can still affect claim decisions. 

   

• Your Policy Lapsed or Is Cancelled: No premium payment means no coverage. If your policy lapses due to unpaid premiums, any claims for loss, damage or injury occurring after the expiration of your policy probably will be denied. Some companies offer grace periods, but don't count on it. 

  Failure to timely make payments can result in a cancellation of your policy. Losses, damage or injuries occurring after your policy is cancelled for non-payment of premiums will not be covered, potentially leaving policyholders responsible for significant out-of-pocket costs. 

   

• Common Denials by Insurance Type: While every policy has unique terms and conditions, certain situations consistently lead to denials across different insurance types. We've identified the most frequent denial reasons our claims team encounters to help you recognize potential issues before they become problems. By knowing these common scenarios, you can take proactive steps to ensure your coverage applies when you need it most. 

   

Auto Insurance 

Certain situations frequently trigger auto claim denials: 

• If the damage is a result of wear and tear, 

• Loss to your vehicle in a racing event, and/or 

• Loss to your vehicle from mechanical breakdown unless you have a specific endorsement for coverage.  

Home and Property Insurance 

Property claims often face denial when: 

• Poor maintenance caused the damage, not a covered event 

• Flood damage without separate flood insurance 

• Damage from a hurricane 

Commercial Insurance 

Business insurance claims commonly face denial for: 

• Claims filed after coverage lapses 

• Damage caused by wear and tear 

• Property damage to your own work 

Preventing Claim Denials 

Review Your Policy Regularly: Schedule yearly policy reviews with your agent. Ask direct questions about coverage gaps and exclusions. Update your policy when life changes occur such as a new car, home improvements, family additions, or job changes. 

Keep Detailed Records: Document everything by taking photos of your property and belongings. You may also want to consider:

• Saving receipts for valuable items 

• Maintaining records of home and vehicle maintenance 

• Keeping medical treatment documentation organized 

Good records make filing claims smoother and reduce denial risks. 

Communicate Clearly: Report claims promptly. Respond quickly to insurance company requests. Ask questions when something seems unclear. Proactive communication prevents misunderstandings that lead to delays or, even worse, denials. 

The Bottom Line 

A common misconception is that insurance companies look for reasons to deny every claim. In reality, claims that meet policy terms and include proper documentation are processed and paid according to the insurance contract. 

Claim outcomes depend on two key factors: whether the loss falls within the policy's coverage terms and whether adequate supporting documentation is provided. Comprehensive documentation from the start facilitates faster processing and minimizes potential complications.  

State regulations require insurers to act in good faith, conduct thorough investigations, and provide reasonable explanations of claim decisions. Understanding policy coverage and documentation requirements helps policyholders navigate the claims process effectively. Contact your independent insurance agent for more information. 

Disclaimer: This article provides general educational information only and should not be considered professional advice or a recommendation for specific coverage. Insurance needs vary based on individual circumstances. Readers should consult with qualified insurance professionals for personalized guidance. This content does not constitute an offer to sell insurance or guarantee coverage availability. 

Frequently Asked Questions

Q: What is the most common reason insurance claims get denied?
A: Claims are most often denied because the policy doesn't cover the specific type of loss or damage, such as flood damage under a standard homeowners policy.

Q: Can missing paperwork cause my claim to be rejected?
A: Yes, incomplete documentation like missing police reports, medical records, or proof of ownership can delay or result in denial of your claim.

Q: Will my claim be denied if I made a mistake on my insurance application?
A: Insurance companies may deny claims based on incorrect information in your application, which they consider "material misrepresentation," even if the error was unintentional.

Q: What happens to my coverage if I miss a premium payment?
A: If your policy lapses due to unpaid premiums, any claims for incidents occurring after the expiration date will likely be denied.

Q: How can I prevent my insurance claim from being denied?
A: Review your policy regularly, keep detailed records and receipts, report claims promptly, and respond quickly to all insurance company requests for information.

Sources: 

1. National Association of Insurance Commissioners. "Consumer’s Guide to Auto Insurance." Accessed September 23, 2025. https://content.naic.org/sites/default/files/publication-aut-pp-consumer-auto.pdf 

2. National Association of Insurance Commissioners. "Consumer Insight: Claim Complaints." Accessed September 23, 2025. https://content.naic.org/article/consumer-insight-claim-complaints