Insurance companies deny claims for myriad reasons and they vary based on the specifics of each case. In Colorado, as in other states, insurance companies have certain criteria and guidelines they use to evaluate claims. While some denials are legitimate due to policy terms or lack of coverage, there are situations where denials may be considered unfair or even illegal.
Here are a few common reasons insurance companies may deny claims in Colorado.
- Policy exclusions – A homeowner’s insurance claim can be denied because the damage or loss falls as an exclusion under the policy. Alternatively, there may be policy limits to the coverage and the claim amount exceeded the coverage limits of the policy. Common exclusions can include things like flood damage (which requires separate flood insurance), earthquake damage, or intentional damage.
An important differentiation regarding flood damage, however. There are often two different things people call “flood.” The actual definition of flood as covered by National Flood Insurance Program (NFIP) policies through FEMA and federal law is an amount of water outdoors on the ground that damages the house.
A second way homeowners, contractors, the general public often use the term “flood” is when they are referring to a lot of water in their house from a roof leak or plumbing leak. This type of water damage is covered by property insurance, and should not be referred to as a “flood” because sometimes the insurance company may respond by saying, “Oh you said you had a flood and flood isn’t covered!”
In terms of exclusions, one of the most common is language that disavows coverage for long term, constant or repeated leakage or seepage of water. All the provisions are different but similarly worded – if you have a pipe leaking and it goes on for a long time, it is not covered. Pay attention to your house and if you notice water, don’t wait to report it!
- Failure to meet policy requirements – Another reason insurance claims may be denied in Colorado is because the policyholder failed to follow the insurance provider’s rules and regulations. Often this includes not filing the claim within a specified time frame and thus missing the deadline.
- Insufficient documentation – Failing to provide required documentation or providing inaccurate documentation can lead to a claim denial. Keep records of everything! For example, if you end up with water damage from a leaking pipe, you may be able to get documents like a water bill that would show a sudden water spike around the time of your alleged leak.
- Suspected fraud – Insurance companies can also deny a claim if they suspect fraudulent activities.
Colorado law requires insurance companies to make reasonable settlement offers based on the policy coverage and damages received to the property. Unfortunately, it may seem like your Colorado property insurance provider is unreasonably denying a claim or delaying payment of a valid claim. Know that acting in bad faith is illegal. If you believe your claim was unfairly denied, consult an insurance law attorney right away to get help. Our team at Kandell, Kandell & Petrie is here to answer your questions and ensure you get the relief your insurance company owes you for your claim. Contact us today to speak to one of our Denver claims advisors.
