Insurance claim denial letter 2024 (guide + free samples)

An insurance claim denial letter is a short note from the insurance company that tells the person who filed the claim that their request for coverage has been refused because for certain reasons.

The letter typically includes details about the policy, the claim, and the reason for denial, and may also provide information about the insured’s options for appeal or further action.

We all hate denials.

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

We all know that the death of a beloved one, an accident, property damage, or sickness is a very stressful event in our lives.

However, if your insurance company denies your claim, it can become even more depressing.

And they can do that anytime, with or without a legitimate reason.

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 I will guide you through

• 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).

Look!

The following is an overview to help you understand how this letter comes into play.

When you make a claim with your insurance carrier, an insurance adjuster will document the circumstances of your incident.

After reviewing your information, he will evaluate whether your coverage claim will be denied or approved.

If your claim is approved your insurance company will proceed to compensate you for the loss.

But when it denies your claim, He is duty-bound to give you a formal letter (an insurance claim denial letter) outlining the reasons for his decision.

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

In the coming section, I will share with you what to do if your insurance company denies your claim.

But here is a key takeaway

Key Takeaway: An insurance claim denial letter is a formal document that informs you about the denial of a tour coverage claim and provides reasons for the decision. A denied claim doesn’t necessarily mean the end of your claims process. You have options to take further action.

Why is an Insurance claim denial letter necessary?

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

Example: If you file a claim for damage to your car, your insurance company may investigate the claim, review your policy, and assess the damage to your vehicle.

After completing this process, the company will send you a letter stating whether your claim is approved or denied.

This letter serves as an official record of the decision made by the insurance company.

Apart from that, Insurance claim denial letter is also necessary to inform you about the decision and the reason for the denial.

That means if your claim is denied, the insurance company must provide a clear explanation of the reason for the denial in writing.

For instance, the letter may state that the damage was not covered under your policy or that you failed to provide sufficient documentation to support your claim.

This letter is important not only to inform you about the denial but also to serve as evidence in case of any future legal proceedings or appeals.

So make sure you keep a copy of the denial letter for your records and to understand your options for further action.

Key Takeaway: An insurance claim denial letter is necessary because it documents the decision made by your insurance company and provides a clear explanation for the denial. Keep a copy for your records and further steps.

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.

Here are the basic contents.

• 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.

Key Takeaway: An insurance claim denial letter must include the insured’s personal details, policy information, details of the claim, and most importantly, the reason(s) for denial. The format may vary among insurance companies, but these details should always be included

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 claims 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

1. 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

The following is a car insurance claim denial letter sample 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 Car 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

1. 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. Relax
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

Key Takeaway: After receiving an insurance claim denial letter, you have to examine the reason for the denial and consider appealing through the insurer’s internal review process. If this is unsuccessful, pursue an external review through your state’s insurance regulatory agency. If both internal and external reviews fail, you may have to find a way to pay the costs on your own.

Common reasons for insurance denials

I believe it would be unfair to end this post without telling you why your insurer might deny your claim.

To put it simply, the following are common reasons why an insurance claim may be denied, but it ultimately depends on your insurance plan:

1. Incomplete application
2. Lack of supporting documentation
3. Lapsed insurance policy
4. Policy exclusions i.e the issue you are claiming is excluded from 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.

Key Takeaway: To increase your winning chances, make sure you understand your insurance plan and file a complete claim supported by the necessary documentation.