A:

Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:

Non-Renewal
An insurance company is not obligated to renew an insurance policy for one of its policyholders. Should the policyholder have excessive claims or a change in circumstances that make him or her uninsurable, the company may choose not to renew. In other cases, they may simply add on additional premiums to reflect the increased risk.

Denied Claims
Even if you pay your premiums regularly and on time, an insurance company may not pay out claims that you report. First, the situation surrounding the claim may not be covered under the policy but could be one of the listed exclusions. One example of this is if homeowners have a flood and file a claim with their home insurance company. Because floods are not covered by home insurance, but by flood insurance, these claims will likely be denied. Second, the claim might be at the level of the deductible, which means that the insured is responsible for paying it. Finally, the insurance company may find the damage to have been caused by the insured which may allow them to deny the claim.

Denied Policies
If you have one type of insurance with a carrier that offers multiple lines of coverage, they are under no guarantee to approve any applications you submit for additional coverage. They will underwrite and evaluate your application just as they would any other applicant and will either approve or decline the policy, based on the risks you present.

RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  2. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ... Read Answer >>
  3. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  4. Should I be Worried About My Insurance Company?

    Policyholders should also take a serious look at the financial stability of their current insurance company especially if ... Read Answer >>
  5. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
Related Articles
  1. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  2. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  3. Insurance

    Homeowner's Insurance Guide: A Beginner's Overview

    Everything new homeowners need to know about insurance to protect their residence.
  4. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  5. Insurance

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  6. Financial Advisor

    Mutual Vs. Publically Traded Insurance Companies

    Should you buy your insurance policy from a mutual or publically traded insurance company?
  7. Insurance

    Bundle Your Insurance For Big Savings

    Bundling your insurance can save you money and time. Read on to see how get the most out of multiline insurance discounts.
  8. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  9. Insurance

    What Is and Isn't Covered by Homeowners Insurance

    Understanding what your insurance covers can be confusing. Learn what almost all insurance policies have in common so you're prepared if disaster strikes.
  10. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
RELATED TERMS
  1. Insurance Premium

    The amount of money that an individual or business must pay for ...
  2. Classified Insurance

    Insurance coverage provided to a policyholder that is considered ...
  3. Assessable Policy

    A type of insurance policy that may require the policyholder ...
  4. Experience Refund

    The portion of an insurance company’s premiums or profits that ...
  5. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  6. Assigned Risk

    A risk that an insurance company is required to provide coverage ...
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  6. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
Trading Center