Can an Insurance Company Deny Coverage?
Insurance isn't always as straightforward as other products, and insurers can deny coverage in many different instances, here are some ways an insurance company can deny you coverage.
Non-Renewal of Insurance Coverage
An insurance company is not obligated to renew an insurance policy for any of its policyholders. Should a 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 increase the premium to reflect the increased risk.
Even if you pay your premiums regularly and on time, an insurance company may not pay out claims you report. First, the situation surrounding the claim may not be covered under the policy because it is 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 not be more than the deductible, which means 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. (For related reading, see: Will Filing an Insurance Claim Raise Your Rates?)
If you have one type of insurance with a carrier that offers multiple lines of coverage, they are under no obligation 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.
(For related reading, see: 6 Types of Insurance Coverage You Didn't Think You Needed.)