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When Can an Insurance Company Deny Coverage for Personal Injury or Property Damage?

While insurance provides a safety net in many circumstances, auto and homeowner’s insurance policies do not cover everything. In fact, although specific policy terms vary from one insurance company to the next, it is typical for auto and homeowner’s insurance policies to contain lists of “excluded perils.” In addition to these specific types of accidents, injuries, and losses that are not covered under any circumstances, there are various reasons why insurance companies may be justified in denying claims for “covered perils” as well.

That said, if you are struggling to obtain payment from your or someone else’s (i.e., a negligent driver’s) insurance company, you should not assume that the delay or denial is justified. While there may be a valid reason for the insurance company’s action (or inaction), it is also very possible that you are a victim of insurance bad faith. Unfortunately, bad faith insurance practices are common in Oregon and Washington, and accident victims and homeowners regularly find themselves struggling to secure the coverage they are rightfully owed.

5 Examples of Valid Reasons for Insurance Claim Denials

First, let’s look at some examples of valid reasons why a claim for auto accident coverage or property damage coverage may be denied. An insurance company may validly deny a personal injury or property damage claim if:

  • The claim isn’t covered. As we mentioned above, standard auto and homeowner’s insurance policies do not cover all possible causes and types of loss. For example, if you were driving your personal vehicle for business purposes, then the accident may not be covered (if you did not pay for the appropriate coverage). Likewise, flood damage is excluded under standard homeowner’s insurance policies and must be purchased separately under the National Flood Insurance Program (NFIP) or from a private insurer.
  • You haven’t paid your premiums. If you haven’t paid your premiums, then you may be in violation of the terms of your policy and this may provide your insurer with grounds to deny coverage.
  • You waited too long to file a claim. Personal injury and property damage claims are subject to statutes of limitations in Oregon and Washington. If you waited too long to file your claim, then the insurance company might not have to pay – even if the cause of the accident and type of loss are clearly covered under the applicable policy.
  • There is not adequate evidence of liability. While insurance companies have an obligation to investigate claims in good faith, they do not have to pay if their investigation is inconclusive or if it indicates that coverage is not warranted. This is why accident victims and property owners need to be their own advocates, and it is one of the reasons why it is generally advisable to hire an attorney.
  • Your claim is “fraudulent.” When a person knowingly files a claim that isn’t covered or intentionally causes a loss in order to collect insurance coverage, this is considered to be “insurance fraud.” Insurance companies do not have to pay claims that are demonstrably fraudulent.

However, it is important to note that mere allegations by the insurance company will not necessarily be valid grounds for denial of insurance coverage in all circumstances. As a result, just because you see the insurance company’s excuse listed above, this does not mean that you should give up on your claim.

5 Examples of Bad Faith Insurance Practices

Now, let’s contrast the above examples with some of the common bad faith tactics that insurance companies use to delay, diminish, and deny payment to policyholders and other accident victims:

  • Misrepresenting the terms of coverage. While you are responsible for knowing the terms of your own insurance policy, the insurance companies cannot intentionally misrepresent what is (and isn’t) covered. If you were told that a covered peril was excluded, this may be indicative of insurance bad faith.
  • Failing to conduct an adequate investigation. In order to deny your claim, the insurance company must have a factual basis for doing so. This means that it is required to conduct an investigation and reach a conclusion that is supported by the evidence that is available. Failure to conduct an investigation – or failure to conduct a timely investigation before critical evidence disappears – is a common bad faith insurance practice.
  • Failing to consider all relevant evidence. When evaluating claims, the insurance companies cannot overlook evidence of liability. If the grounds for denial of your claim are based on a selective review of the available evidence, the failure to consider pertinent information may entitle you to additional compensation beyond the value of your claim.
  • Causing unnecessary delays and making unreasonably low offers. Engaging in delay tactics is another common bad faith insurance practice, as is making unreasonably-low payment offers that are not supported by the evidence of loss. While the insurance companies do not have to calculate your losses for you, they do have an obligation to act reasonably in deciding how much to offer for your claim.
  • False accusations of insurance fraud. Just as you cannot defraud the insurance companies, the insurance companies cannot defraud you. If an insurance company falsely accuses you of filing a fraudulent claim (e.g., by intentionally causing damage to your home or fabricating evidence), this is a clear example of insurance bad faith.

Learn about more common examples of bad faith insurance practices: When Does a Payment Delay or Denial Amount to Insurance Bad Faith?

Speak with an Attorney at D’Amore Law Group about Your Bad-Faith Insurance Denial

If you believe that you may have been wrongfully denied insurance coverage for a personal injury or property damage claim, it is important that you speak with an attorney promptly. At D’Amore Law Group, we have decades of experience helping victims of insurance bad faith in Oregon and Washington, and our lawyers have helped numerous clients secure payment in excess of the policy limits for their claims. To find out if you are a victim of insurance bad faith, give us a call at 503-222-6333 or request a free initial consultation online today.

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