If disaster strikes your home and you plan to seek insurance coverage, it is important to understand how an insurer might review your claim. Insurers often look for reasons to deny coverage, relying on complex or vague language buried in the fine print. By understanding these common phrases, you can communicate more effectively with an insurer and protect your property from unexpected denials.
“Gradual deterioration” or “pre-existing wear and tear”
Many policies only cover losses that occur “suddenly and accidentally.” This means an insurer might not cover damage that happens slowly over time due to normal use or aging. However, insurers often stretch these terms. For example, a roof might leak after a storm, but the company may claim it was already worn out prior.
In Wisconsin, courts often look to whether a specific, covered peril was the “proximate cause” of the loss.
“Acts of God” or “force majeure”
Often used in property insurance, these terms refer to events beyond human control, like earthquakes, floods or hurricanes. While standard policies cover some “Acts of God,” others often require separate, specialized riders. Insurers then may deny a claim by arguing the damage resulted from natural causes not specifically covered by the policy.
“Failure to mitigate damages”
After an insured event, a policy often requires you to take reasonable steps to prevent further damage. This is known as “mitigating damages.” If a policyholder fails to do so, the insurer might deny coverage for any additional damage that occurs.
“Material misrepresentation”
If an insurer discovers that you provided false or incomplete information, a claim may be denied. This could happen if you failed to disclose a known hazard or an accurate property value. However, Wisconsin law provides that a misrepresentation does not automatically prevent recovery, unless it was material, made with intent to deceive or contributed to the loss.
“Exclusions for specific types of damage”
Many insurance policies include detailed exclusions that limit coverage for certain types of damage. For example, some policies may exclude damage caused by wind-driven rain or hail. Insurers may use these exclusions to deny part or all of a claim, even after a storm. This is why it is important to review your policy carefully and understand what is and isn’t covered.
How to handle a claim denial based on these terms
A denied claim is not necessarily the end of the road. You may request a detailed explanation from your insurer detailing why the claim was denied based on specific policy language. Moreover, gathering supporting evidence, such as inspection reports or witness statements, is a critical step.
Navigating complex insurance contracts can be a daunting task. With proper legal counsel, you can interpret policy language and assess the validity of a denial.