Getting insurance is like buying Pepto Bismol — you hope that you never have to use it, but in the case that you need to, it really saves you. But when it comes time to use your renter's insurance and get that return on your investment, you don't want to be denied for a claim. Here are some of the top reasons that claims get denied and how to avoid them.
What is a claim, and what does it mean when it's denied?
When you get into a situation where you need to use your renter's insurance, such as a fire, you can file a claim. This is a formal request to your insurer for compensation or financial assistance in the event of a covered loss. Note that the number of claims that you file directly affects your monthly premium, and if an excessive amount of claims are filed, your insurer can deny you coverage. Your claim can be approved, but it can also be denied. That is, your insurer believes that, under the terms and conditions of the policy you've purchased from them, they cannot provide you coverage for the claim-specific loss or event.
Top Reasons for Claim Denials and How to Avoid Them
Insufficient or wrong information
Think of it this way: when you file a claim, you are basically asking you insurer for a favor, so if you don't give them enough details about what they are doing for you, they can very easily say no. To prevent this from happening, be sure to provide detailed information on your claim form when filing. Also, make sure that the documentation you are providing is accurate. If you move, remember to keep this information updated with your insurer. Renter's insurance, although under your name, is attached to the property that you bought it for. When it comes time to file a claim, you'll thank yourself for remembering to update your address.
Unauthorized policy coverage
When initially purchasing renter's insurance, you should choose one that covers the matters that are most important to you. If an incident takes place and you need to file a claim for something that is not covered in your policy, your insurer can very well deny you coverage. The incidents covered by your policy are called "named perils." Say your apartment floods and you want to be covered for any valuables lost in the incident, so you file a claim. If flooding is not a named peril, your insurer can deny the claim. To avoid this situation, make sure that you take into consideration what's most likely to go wrong and what you want to be protected in these events when choosing a policy.
This is one of the top reasons that claims get denied. Forgetting to pay your monthly premium will unfortunately result in the temporary loss of your insurance benefits, including claims. To make sure that this doesn't happen, set reminders for yourself to pay your insurance by the due date each month.
Inaccurate resident reporting
Damage done by any resident that lives in the property but is not listed on the renter's insurance policy will usually not be covered by the insurance company. Although your spouse is usually covered without being listed explicitly on the policy, your roommate's names are often required to be updated. Remember, some insurance companies may not even cover roommates. Be sure to update this information with your insurer whenever there are any new residents.
Inadequate home inventory
When filing a claim, make sure that you have a detailed list of the valuable items you want to be protected. This way, your insurer knows exactly what kind of significant property you need covered, such as expensive technology, jewelry, or bikes. Anything left off of this list will likely be denied for a claim.
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