Why Do Insurance Companies Deny Claims?

The health insurance industry rocketed toward nearly a trillion dollars in revenue in 2019, with over $35 billion in profit. While some are describing this as the “golden age” of insurance, the reality is not so golden because these astounding numbers come at the expense of consumers. Individuals are paying higher premiums and receiving lower payouts on their claims for insurers to be able to achieve these milestones and margins. Frankly, the insurance companies make no secret of the fact that they are working to take advantage of their customers and issue claim denials.

After a serious accident, you have bills to pay, injuries to heal, and mounting medical costs for your treatment, prescriptions, and care. If your injuries have occurred as a result of an auto accident, you likely have car repairs and property damage repairs to worry about as well. Time spent in the hospital, visiting doctors, or taking care of repairs can mean missed work and lost wages. You deserve your full, just compensation.

You can file a complaint if you feel your claim was unjustly or unlawfully denied. One of the best ways to approach this situation, however, is with the help of an expertly qualified personal injury attorney. If you’re just beginning the claim process, reaching a roadblock, or have already been denied, a personal injury lawyer can help advise you of your options and potentially even rectify the situation. With a free, no-risk consultation from Thompson Law, what have you got to lose?

Top Reasons Your Insurance Claim is Denied

Even though the reasons for an insurance claim denial range widely, they have one important thing in common – they are all motivated by the insurance companies’ drive to avoid paying your fair settlement. They make money by holding back as much of your payout as possible.

Insurance agents even get bonuses and performance rewards for how successful they are at denying and minimizing claims.

Here are 10 of the top reasons that medical insurance and/or auto insurance claims are denied:

  1. Prior Injuries or Surgeries: If insurance companies are granted access to older medical records and they discover a record of prior injuries or surgeries, they may try to tie these past events to your current state of health. This can be a tactic to side-step or deny the fact that the accident on which you have made your claim is the cause of your current injury. It is very important not to sign authorizations for the insurers to see your medical history. If you have questions about forms you are being given or are unsure why your insurer needs the information they are requesting – trust your gut. Contact your Thompson Law for advice about how to proceed before you sign.
  2. Pre-Existing Conditions: Insurers are highly likely to deny claims that they argue are related to your health status prior to the accident. Similar to the above mentioned prior injuries or surgeries, though even wider in scope, pre-existing conditions also include illnesses you have suffered or other genetic health factors that may make you susceptible to injury.

Doctor looking at x-rays - Insurance claim denial Pre-Existing Conditions

  1. Lapse in Time Between Accident and Seeking Treatment: If you are not prompt in seeking medical care after your accident, insurers are likely to deny your claim, arguing that you were injured by another cause, not the accident. This is frustrating as injuries sustained in an accident can have delayed onset, once the accident adrenaline has worn off. Or they can compound over time with other injuries. First and foremost, it’s important to take care of your health by seeking medical treatment promptly. But its also essential to the expediency of your claim to have your injury validated and diagnosed by a medical authority right away.
  2. Violation of State Law: Insurance companies will try to deny your claim if you were driving illegally at the time of the accident. For example, if you were driving under the influence of drugs or alcohol, driving without a valid license, driving without valid insurance, driving in a location where you were trespassing, or participating in other behavior that may have made the wreck avoidable, the insurer may deny on these grounds. Getting past these denials is tricky because it involves arguments around intent. It’s helpful to have an excellent Dallas personal injury attorney representing you and fighting for you when these types of arguments are in play.

Insurance Claim Denial for an Unlicensed Driver

  1. Policy Limits: When you purchase car insurance, you select the levels of coverage and policy limits to build a full policy. If an accident exceeds these limits, there is not much more you can do. To recover more funds, you would need to sue at-fault parties directly. This policy limits issue can be very significant in Texas which has a 30/60/25 minimum coverage requirement. This means $30,000 for each person, $60,000 per accident and $25,000 for property damage. The average new car cost in 2019 was over $36,000 so totaling just one car in a crash with a minimally insured driver can mean policy limits are maxed out on one car’s property damage alone.
  2. Noncovered Charges: Noncovered charges denial is similar to a policy limits denial, in that the claim goes beyond the scope of your policy. Instead of the claim exceeding your policy limit, however, the claim is for a type of coverage that you do not have at all. Claims for non-covered charges will be denied. For example, if you file a claim for personal injury protection (PIP) payout but do not have PIP in your policy (it can be waived in Texas) you will be denied. With medical insurance, certain cosmetic or elective surgeries are often excluded from benefits packages, so if a portion of your injury treatment was considered cosmetic, that may be an excuse the insurer uses to deny you.
  3. Referral or Pre-Authorization was Necessary: Certain specialist visits or specialty procedures like CT scans or MRIs typically require pre-authorization from a referring doctor. In these cases, your ER doctor or primary care physician needs to authorize that in their expert opinion you require the procedure. You may be denied the procedure or receive a payment denial after the procedure without the pre-authorization steps having taken place in the right order.
  4. Out-of-Network Provider: Health insurance companies will deny charges from visits to an out-of-network healthcare provider. Out-of-network typically means that the healthcare institution or practitioner has not reached an agreement to the insurer’s payment terms, so they do not work together. This means higher costs or entirely out-of-pocket costs for you. This can be avoidable if you use the search tools offered by your insurer to select medical providers who are in-network. Sometimes, however, mistakes happen, or there is no nearby in-network provider when you critically need care. In these cases, speak to a personal injury attorney to see what can be done about negotiating with the insurer regarding your specific injury circumstances.

Doctor speaking with patient - Claim denial out-of-network provider

  1. Transcription or Billing Errors: This may be one of the most frustrating claim denials of all –denial based on a clerical error, or essentially, a typo. If you are injured, in pain, or waiting on car repairs and stressed about it, the last thing you want to hear is that you need to wait even longer on your settlement check because someone filled out a form incorrectly. The good news is that these claim denials maybe some of the easiest to reverse, as they simply require corrections in notation. The bad news is that this takes time and is just one more opportunity for insurers to delay, drag their feet, and test you to see if you’ll just give up the fight.
  2. Denial of Fault: Insurance companies sometimes claim that in their interpretation of the evidence, the events that took place do not confirm their client to be at fault. They may argue that fault was shared, or the accident was caused by external circumstances. The best defense against this type of denial is to have strong evidence and a great personal injury lawyer by your side. Not only will evidentiary documents like police reports, photos, and witness statements support a strong case, the insurance companies will also take you more seriously knowing that you have hired injury attorney representation.

He said she said claim denial in word versus word accident

What to do if You Receive am Insurance Claim Denial?

If you receive a health insurance claim denial, you are entitled to an Explanation of Benefits (EOB). If you receive an auto insurance claim denial, you will receive a notification letter with reasons. Insurance companies have tricks for making these documents difficult to receive and hard to decipher. Your EOB may be nested in a clunky online portal that you need to register to use, or it may be mailed so there is a confusing delay between services and processing.

Documents may be coded with medical or industry acronyms so that they are impossible to understand. Especially if you are visiting several specialists or nursing serious injuries, documentation about the services rendered, doctors visited, and prescriptions provided can be complicated! The health insurance company has no incentive to clarify or help because your confusion is their opportunity for profit.

You are entitled to challenge claim denials. It’s crucial to gather as much evidence as possible and get medically checked out right away after an accident to set yourself up for success avoiding and combating denials. Taking these steps is essential to build a strong case for the events that occurred during your accident and confirming the care that you needed in the aftermath. Documentation and authoritative proof are what knock the insurance adjusters off their game, leaving them no choice but to acknowledge and affirm your deserved payout.

It may take a couple of rounds, but you can win against the insurers. Your best bet at winning is to bring in the assistance of an expert personal injury attorney. They can help with the deciphering options, making demands, and repelling denials.

Personal injury attorney claim denial

Avoiding an Auto Insurance Claim Denial: How Thompson Law Can Help

The best way is to avoid an insurance claim denial is by entering insurance claim negotiations from a strong standpoint in the first place. Reach out to an experienced personal injury lawyer like Thompson Law if you’ve been injured in an accident. The expert team at Thompson Law can provide you with options and advice from your first free, no-risk phone call, and guide you the entire way through the process after your accident. From seeking medical treatment to demanding every penny of your deserved compensation all the way to winning your settlement or court case, your Thompson Law team has you covered.

No Win No Fee for Personal Injury Case - Insurance Claim Denial

It does not matter if you were injured in a car accident near the border in El Paso, or near the beach in Corpus Christi – anywhere in Texas and across the entire United States, Thompson Law can help.


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State law limits the time you have to file a claim after an auto accident. If you have been injured in an accident, call now to get the help you need.