The Short Answer:
Insurance companies deny claims for a variety of reasons, most of which are rooted in the terms of your policy, the information provided in your claim, or how and when the claim was filed. Common reasons include incomplete or inaccurate documentation, services not covered under the policy, treatment deemed not medically necessary, use of out-of-network providers, missed deadlines, or suspicion of fraud or misrepresentation.
In some cases, even minor clerical errors, such as incorrect billing codes or submitting the claim to the wrong insurer, can result in a denial. The specific reason for denial is typically explained in the denial letter, and understanding that reason is critical before taking steps to appeal or seek legal help.
Key Takeaways
- There are multiple reasons claims get denied. These include policy exclusions, incomplete or incorrect paperwork, billing or coding errors, services not covered under your policy, late submissions, or suspicion of fraud or misrepresentation.
- Understanding the denial is your first step. Carefully review the denial letter and your policy documents to determine why your claim was denied and whether the decision was valid.
- Appeals are not only possible, they’re your right. Most insurers must provide a formal appeals process, including internal reviews and the option to request an independent, external review if needed.
- Legal action may be warranted in some cases. If your insurer acted in bad faith—such as unreasonably delaying, misrepresenting policy terms, or denying valid claims—you may have grounds to sue.
- Many claims are denied, but that doesn’t mean they’re final. Data shows nearly 1 in 5 insurance claims are initially denied. A strong appeal with proper documentation can often overturn that decision.
- Time matters. There are strict deadlines for filing appeals and lawsuits, so hire an attorney to preserve your rights.
Reasons Why Insurance Claims Are Denied
When a personal injury claim is denied, it’s not random. Insurance companies follow specific procedures and rely on policy language, billing codes, and internal criteria to determine eligibility. Understanding these common reasons can help you identify and potentially resolve issues before they compromise your claim entirely.
Here are the most frequent causes of denied personal injury claims:
1. Administrative Errors
Incorrect billing codes, wrong insurer billed, duplicate submissions
Simple clerical mistakes are one of the most common reasons claims are denied. A transposed number in a billing code, submitting the claim to the wrong insurance provider, or even submitting the same claim twice can trigger an automatic rejection. These are often fixable, but only if caught early.
2. Coverage Issues
Services not covered, out-of-network providers, policy exclusions
If the treatment, procedure, or service isn’t explicitly covered under your policy or is specifically excluded, your claim can be denied. This is especially common when providers are out-of-network or the care exceeds coverage limits. Always review your plan documents closely.
3. Medical Necessity (Health Claims)
The insurer disputes whether treatment was actually required
In many health-related personal injury cases, insurers may argue that a treatment wasn’t “medically necessary.” If they believe the care was excessive or unrelated to the injury, they may deny the claim entirely. A letter of medical necessity from your doctor can often help in appeals.
4. Misrepresentation or Suspected Fraud
False or incomplete information, red flags in the claim
If the insurer believes your application or claim was dishonest, whether intentional or not, they can deny it on grounds of fraud or misrepresentation. This might include exaggerated injuries, conflicting reports, or missing details.
5. Pre-Existing Conditions or Lapsed Policy
Coverage exclusions or missed renewal deadlines
Claims tied to a pre-existing condition, or those filed after your policy has lapsed, are frequently denied. Some insurers also impose waiting periods for new policies, making it important to file at the right time.
6. Missed Deadlines
Late filings or delayed documentation
Most insurance policies have strict deadlines for reporting injuries and submitting claims. Waiting too long can void your eligibility, even if the claim would otherwise be valid.
What to Do When Insurance Denies a Claim
Receiving a denial can be frustrating, but it’s not the end of the road. There are specific steps you can take to challenge the decision. While you may be able to resolve some issues on your own, it’s often wise to speak with a lawyer—especially if the claim involves a significant amount of money, medical treatments, or legal complexity. An experienced attorney can help you understand your rights, evaluate whether the denial was valid, and guide you through the appeals process or potential legal action.
Here’s what to do when insurance denies a claim so you can start building a strong case for appeal or further action:
Your insurer is legally required to provide a written explanation of why your claim was denied. This letter should identify the specific policy provision or reason (e.g., coding error, out-of-network provider, missed deadline). Read it closely and note any terminology or policy references you don’t understand.
Speaking directly with a claims representative can often clear up confusion. Ask for specifics:
- Was the denial due to missing paperwork?
- Is the issue related to coverage, timing, or billing?
- What documentation can you submit to support your appeal?
Take notes during the call, including the representative’s name, the date, and what was discussed.
Dig into your insurance policy documents. Look for:
- Whether the denied service or treatment is actually excluded
- Limits on coverage amounts or visit counts
- Any pre-authorization requirements you may have missed
Being aware of your policy language is essential to knowing whether the denial is valid or challengeable.
Start a folder or digital record. Save:
- The denial letter
- Your notes from phone calls
- Emails or letters to/from the insurer
- Medical records, invoices, and proof of submission
Thorough documentation will be crucial if you move into the appeals process or legal action.
How to Appeal a Denied Insurance Claim
If your personal injury claim has been denied, don’t panic—you have the legal right to appeal. Insurers are required to provide a process for both internal and external reviews. Following these steps carefully gives you the best chance of reversing the denial.
1. Gather Supporting Documentation
Start by collecting any evidence that can support your case. This may include:
- Medical records that show treatment was necessary and related to your injury
- Invoices and bills from medical providers
- A letter of medical necessity from your doctor explaining why the treatment was appropriate
- Any correspondence or communication with the insurance company
The more thorough your documentation, the stronger your appeal will be.
2. Write a Formal Appeal Letter
Your appeal letter should be concise, factual, and direct. It should:
- Identify the specific claim and date of denial
- Clearly explain why the denial was incorrect based on your policy and supporting evidence
- Reference any policy language or medical standards that support your case
- Attach copies of all relevant documentation
Working with an attorney helps ensure that your appeal letter includes all of the necessary information.
3. Submit Your Appeal Before the Deadline
Insurers often impose strict time limits for submitting an appeal—sometimes as short as 30 or 60 days. Missing this deadline can permanently bar you from challenging the denial.
Tip: Confirm the deadline listed in your denial letter and send your appeal via certified mail or another trackable method.
4. Request an External Review if Needed
If your internal appeal is unsuccessful, you may have the right to request an external review by an independent third party. This reviewer is not employed by your insurer and is legally obligated to offer an unbiased opinion. Our office has connections to third parties and experts who can support your claim.
Insurance Claim Denial FAQs
The most frequent reason is incomplete or incorrect information on the claim form. This could include missing documentation, wrong billing codes, or failing to meet policy requirements like pre-authorization. Fortunately, these types of errors can often be corrected through a formal appeal.
Start by reviewing the denial letter and policy. Then write a clear, concise letter that:
- States you are appealing the decision
- Explains why the denial is incorrect
- Cites relevant policy language
- Includes supporting documents (medical records, bills, letters of medical necessity)
Make sure to include your policy and claim numbers, and send your appeal before the deadline. Our attorneys can help you through every step of this process.
Yes, many denied claims are overturned on appeal. If the denial was based on missing documentation, administrative errors, or misinterpretation of your policy, submitting additional evidence can lead to approval. Appeals are especially worth pursuing before considering legal action.
When speaking to an insurance adjuster, avoid admitting fault, speculating about your injuries, or downplaying your condition. Stick to the facts and refer to documentation whenever possible. Never give a recorded statement without first consulting a legal professional.
Yes, if the denial was made in bad faith, or if the insurer violated the terms of the policy, you may have grounds for a lawsuit. Common examples include unnecessary delays, ignoring submitted evidence, or misrepresenting coverage. Always speak with an attorney before filing.
When to Call a Lawyer
While many insurance denials can be resolved through appeals, there are situations where having an attorney on your side makes all the difference. You should strongly consider contacting a lawyer if:
- Your claim was denied for vague or invalid reasons. Insurers must provide clear explanations—if the reasoning feels flimsy, it may be a tactic to discourage you.
- You suspect bad faith. This includes unnecessary delays, ignoring evidence, misrepresenting policy language, or unfairly denying a valid claim.
- You’ve exhausted your appeals. If both internal and external appeals have failed, legal action may be your only path forward.
- The statute of limitations is approaching. Each state limits how long you have to file a lawsuit. An attorney can help ensure you don’t lose your right to compensation.
- You want guidance and advocacy. Insurance companies have teams of lawyers protecting their interests—having your own legal advocate helps level the playing field.
Many law firms, including ours, offer a free case review to evaluate your denial and explain your options.
Don’t Face Insurance Companies Alone
Insurance companies are skilled at protecting their bottom line, often at the expense of injured individuals. But a denial doesn’t have to be the end of your claim. With the right guidance and persistence, many denials can be overturned—or challenged in court when necessary.
Take the next step today. Contact The McMahan Law Firm for a free, confidential case review to learn how we can help.
