You have insurance for a reason: if something happens to you, your home, or your car, your policy will kick in to provide you with the financial coverage so you or your family are not stuck paying a huge bill. If the time ever comes when an incident occurs, you can file a claim and be paid out the benefit as specified in your contract.
But what happens if your claim is denied? And why would it be denied in the first place? Let’s go over some scenarios that may prevent your claim from being approved.
There are many reasons why your claim may have been denied, including the following:
When you first take out an insurance policy, you’ll have the option to choose various factors of your plan, including the coverage amount. Generally speaking, the higher the coverage amount applied for, the more expensive the insurance policy will be.
It’s important to carefully assess your needs before selecting a certain coverage amount so that when the time comes to file a claim, you’ll receive enough money to cover the cost of damages.
But if the claim you file involves damages that are far above your coverage limit, you will have to cover the difference on your own, For instance, if your coverage amount is $50,000 and your claim specifies $80,000 in damages, you’ll need to pitch in that extra $30,000 yourself.
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When it comes time to file a claim, honesty is imperative. It’s not worth taking the risk of omitting certain pieces of important information or fibbing on others in order to try and get your claim approved or to claim a higher amount of damages. Complete transparency is crucial, as your claim can be quickly denied if your insurer discovers that you’ve been dishonest.
Honesty needs to start from the moment that you apply for a policy. When you first apply for an insurance plan, you’ll be asked a series of questions. The answers you provide will help your insurer determine your eligibility for coverage and the cost of your policy. If you don’t provide accurate information right from the get-go, any claims made going forward may be denied, and your policy may be at risk of being cancelled.
For instance, when applying for a life insurance policy, if you smoke and do not specify that on your application, you could be denied. When it comes to insurance, honesty is the best policy.
A life insurance policy includes something known as a ‘contestable period’, which gives the insurance provider the chance to make sure your claim is not fraudulent before the benefit is paid out. This period is usually anywhere from 1 to 3 years after a policy is taken out.
Your insurance company will want to have some time to carefully review your claim and application to make sure it is accurate and that there is no false or missing information.
If you die during the contestable period, there is a risk that your benefit payment to your beneficiaries may be denied. That said, the insurer is still required to honour the contract, though they still reserve the right to void the claim if they end up finding any false claims on the application.
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If your beneficiaries submit a claim on your life insurance following your death, there’s a possibility that they may not receive the benefit if your cause of death is not covered under your policy.
Insurance companies usually have a list of death causes that are excluded from policies, such as suicide, pre-existing medical conditions, travelling to a dangerous destination, or being intoxicated while driving, to name a few. Look over your policy to see what types of death are and aren’t covered.
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If you must file a claim, you should do so immediately or shortly after the incident in question. Waiting too long can risk claim denial.
Your policy will only remain active if you keep up with your premium payments. If you fail to pay your premiums, your policy can be cancelled and you will no longer be covered.
Certain incidents are not covered under various insurance policies. For instance, an auto insurance policy may not cover damage done to your car if it was being used for illegal purposes. Or your home insurance policy may not cover a claim if the damage was caused by a flood from an external source — such as sewer backup or a torrential downpour — as separate riders may need to be purchased for these types of issues.
| Type of Life Insurance | Availability | Number of Partners | |
 | - Term life insurance - Permanent life insurance | - | - |
 | - Term life insurance - Critical illness insurance | BC, AB, SK, MB, ON, NS, PEI, YT, NWT, NT | - |
 | - Term life insurance - Whole life insurance - Disability life insurance - Critical illness life insurance - No medical life insurance | ON | 16 |
 | - Term life insurance - Permanent life insurance - Critical illness life insurance | BC, AB, SK, MB, ON, NB, NS | 50+ |
 | - Term life insurance - Permanent life insurance | All of Canada | 30+ |
If your claim is denied, you may still have some recourse. Consider taking the following steps:
When you file a claim, you’ll be assigned an adjuster who will deal with your case. If you don’t get the outcome you were looking for, you may be able to speak with someone in a position of more power within the company to see if there is anything else that can be done for your situation.
You have the option to file a complaint in writing to the internal ombudsman of your insurance company who can conduct an investigation of your complaint. If you have an issue with the insurance agent, you can get in touch with an insurance regulator in your province who will look further into the conduct and qualifications of the agent or broker.
There are services available that will take an unbiased look at your case and may help to reverse the decision about your claim being denied.
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To file a claim, consider the following:
Before you file a claim, make sure you are covered for the incident in question. Most policies have exclusions, so you’ll want to make sure your situation is not excluded before you start the claims process.
In some cases, it may cost you more to pay for your deductible — which is required before your policy kicks in — than it would to cover the cost of damages suffered. For example, if your car insurance deductible is $1,000 and the cost to make repairs is $700, it wouldn’t be worth it to file a claim.
As mentioned, you will need to file a claim soon after the incident to avoid the risk of your claim being denied. When you do contact your agency, be sure to provide them with as much information as possible, including a description of the damage, photos, receipts, police reports, medical records, and any other info that your insurer will need to assess your claim.
The last thing you want is to have an insurance claim denied, especially after being diligent about making your premium payments. But there are certain things that you may be doing that could put you at risk of having your claim denied. Not only should you keep up with payments, but also make sure that you’re honest in your application, you file your claim in a timely manner, and the incident in question is included in the policy.
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Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.
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