Insurance claim denial letter 2023 (guide + free samples)

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We all hate denials.

But sometimes in our life, we have to face it.

We all know that the death of our beloved one, accident, property damage or sickness is a very stressful event in our life but they become more depressing if your insurance company denies your claim.

In fact, Depending on the type of loss, your insurer could have a legitimate reason for doing so, but that might not always be the case.

If the insurance company denies your claim they have to formally inform you about their decision through an Insurance claim denial letter

An Insurance claim denial letter will help you understand the reason for the denial and plan your next move.

To help you handle insurance claims denials here you will learn

  • What is an Insurance claim denial letter?
  • Why is an Insurance claim denial letter necessary?
  • Common reasons for insurance denials
  • What does an Insurance claim denial letter contain?
  • An insurance claim denial letter sample
    • property insurance claim denial letter sample
    • car insurance claim denial letter sample
  • What to do after receiving an Insurance claim denial letter?
  • etc.

What is an Insurance claim denial letter?

An Insurance claim denial letter is a brief statement of facts written by an insurance company to inform the insured that his coverage claim has been denied due to specific reason(s).

Here is how things work

When you make a claim with your insurance carrier an insurance adjuster will be responsible for documenting the circumstances of the incident.

After reviewing the information supplied the adjuster will evaluate whether your coverage claim will be denied or approved

If the claim is approved the insurance company will proceed to compensate for the loss but if denied, the insurance provider will give you a formal letter (an insurance claim denial letter) outlining the reasons for the decision.

The good news is that a denied insurance claim does not necessarily indicate that the insurance claims procedure is over.

If you disagree with your insurer’s claim denial, you have the option to take further actions that will be covered later in this post.

Why is an Insurance claim denial letter necessary?

An Insurance claim denial letter is necessary to document the final decision of the insurance company after evaluating your claim.

It is also necessary to inform you about the decision and the reason for the denial.

Furthermore, an Insurance claim denial letter may act as evidence in case the issues go for further determination.

Common reasons for insurance denials

Depending on your insurance plan, there are a variety of circumstances that could lead to your insurance claim being denied, but the following are the common ones.

  1. Incomplete application
  2. Lack of supporting documentation
  3. Lapsed insurance policy
  4. Policy exclusions i.e the issue you are claiming is excluded in your coverage
  5. Not enough coverage. Assume you have $25,000 in property damage liability coverage and a car worth $40,000. The auto insurance company will pay up to the permitted $25,000 but will deny the remaining $15,000
  6. Policy canceled for lack of payment
  7. In the case of a medical claim, the common reason is the issue is not medically necessary
  8. In some cases, a claim could even be denied due to, errors, bad faith, or misrepresentation of the facts
  9. etc.

For common reasons for denial concerning health insurance read this article from Washington Office of Insurance Commissioner. For car insurance read this one from bankrate.com.

You don’t have to stress much about those issues because it depends on how your insurer will judge your claim.

To save your face, among other things, make sure you always file a complete claim that contains only relevant information and is supported by the necessary documentation.

To help you file a winning claim to your insurer check and learn from this letter for a water damage claim.

What does an Insurance claim denial letter contain?

Generally, the format of an Insurance claim denial letter may differ from company to company, but it must contain all pertinent information about the claim and the reason (s) for denial as follows;

  • Insured personal details (name, adrees, and contact information)
  • Policy name
  • The policy number
  • Claim number
  • The details of the insured object eg. vehicle SN and other description
  • Claimed amount
  • Reason (s) for denial
  • A statement that the claimant has the right to appeal against the decision (optional)
  • A statement that an insured can contact for further information.

Insurance claim denial letter sample

The following is the general sample of an insurance claim denial letter

COMPANY LETTERHEAD

DATE

Recipient’s Name
Street Adress
City, State, Zip code

Dear Mr./Mrs./Ms. [Recipient’s Last Name]

This is to notify you that your insurance claim no. [#] regarding [description of the incident] in relation to your [name of policy] policy number [#] has been denied due to the following reason (s)

  • [description of the reason]

Kindly note that you have [#] days to appeal against this decision.

If you have any queries regarding this letter contact us through [email] or [phone]

Sincerely

Signature

Name
Title
Company Name

Property insurance claim denial letter sample

The following is a sample property insurance claim denial letter from an insurance company

COMPANY LETTERHEAD

DATE

Recipient’s Name
Street Adress
City, State, Zip code

Dear Mr./Mrs./Ms. [Recipient’s Last Name]

This is to notify you that your insurance claim no. 100 regarding $3,000 compensation for water damage to your property number 1234 on Hope Road, Downtown, which occurred on October 1, 20.., as a result of a broken water pipe in relation to your policy number 0001 has been denied due to the following reason

The Damage is NOT Covered under your insurance policy

Kindly note that you have [#] days to appeal against this decision.

If you have any queries regarding this letter contact us through [email] or [phone]

Name
Title
Company Name

Car insurance claim denial letter sample

COMPANY LETTERHEAD

DATE

Recipient’s Name
Street Adress
City, State, Zip code

Dear Mr./Mrs./Ms. [Recipient’s Last Name]

This is to notify you that your insurance claim no. 01 regarding $6,324 compensation for your car accident that occurred on [date] at [location] in relation to your motor vehicle insurance policy number [#] has been denied due to the following reason

Lack of supporting documents- Police reports and eyewitness statements.

Kindly note that you have [#] days to appeal against this decision.

If you have any queries regarding this letter contact us through [email] or [phone]

Name
Title
Company Name

What to do after receiving an Insurance claim denial letter?

The following is what you are supposed to do after receiving an Insurance claim denial letter from your insurer

  1. Understand that receiving the denial is not the end of your claiming process.
  2. Examine the reason for denial and see if you can come up with a strong appeal
  3. Before appealing contact all relevant parties (medical providers, police department, etc.) to see if they can help you sort things out.
  4. Lodge your first appeal (an internal review) with your insurer.
  5. If your first appeal failed, lodge the second appeal (external review) with your state’s insurance regulatory agency
  6. When the external review also failed you have to find a way to pay the costs anyway.

To help you learn how you can lodge a successful appeal against any Insurance claim denial have a full guide, you can read it here

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Isack Kimaro
Isack Kimaro

Holder of Bachelor of Laws (LL.B) and Post Graduate Diploma in Legal Practice. I am dedicated to providing valuable and easy-to-understand legal information for individuals at all levels of understanding. Whether you are a layperson looking to increase your knowledge, a law student striving to excel in your studies, or a practicing lawyer wanting to expand your expertise, I am here to help. I'm not creating content, I'm creating awareness to empower you to take control of your legal understanding and achieve your goals.