This week I want to talk about the dreaded insurance claim denial letter.
If you have suffered a loss, it is likely that you have received some form of denial letter (or at least you should have, if not, then contact us immediately because the insurance company may now be liable). That letter could be 1.) a complete denial or 2.) a partial denial.
In the first instance, your claim may face a “complete denial.” This means the insurance company is not willing to accept any coverage or pay you any amount of money for your loss.
For example, imaging water during a heavy storm rises underground and seeps through your foundation, damaging your basement. The insurance company may say that the damage was the result of “groundwater” or “subsurface water,” and completely deny your claim (although, technically, they still have to prove this!)
In the second instance, your carrier may agree to pay for only part of your damages, meaning they accept coverage for a portion of your loss, but not all of it. We call this a “partial denial.”
An example of a partial denial may be if a pipe should break in your kitchen. The insurance company agrees to pay for the cabinet where the pipe was, but a disagreement ensues over the extent of what was damaged (whether all of the cabinets need to be replaced, the floor is destroyed, etc.) The insurance company pays you the cost of one cabinet, but denies paying for anything else. You may receive payment for the one cabinet, followed by a partial denial letter for the rest of the damages.
The State of New Jersey has codified some rules and regulations that your insurance company must follow for either of the above denial letters to be proper. New Jersey Administrative Code § 11:2-17.8 states:
“(a) No insurer shall deny or offer to compromise a claim because of a policy provision, including any concerning liability, a condition, or an exclusion without providing a specific reference to such language and a statement of the facts which make that language operative.”
This code is key when reviewing your denial letter. Sometimes, whether you receive a partial or complete denial, the insurance company may only reference policy language in your denial letter, without actually outlining the facts to tie your loss to the policy.
Under the above code, this is improper. These insurance claim denial letters can be hard to follow, so contact Wheeler, DiUlio, & Barnabei today to let us help sort it all out!