Five Tricks Insurance Companies Use to Deny Claims (and How to Avoid Them)

Insurance is a modern necessity—and it can often be a literal lifesaver. When any sort of disaster strikes, whether it’s to your property, your business, or your health, getting a payment on your claim can mean the difference between getting through the emergency in one piece and being buried under bills for years to come.

While it might seem pretty straightforward, anyone who’s actually dealt with insurance companies knows that their least favorite thing to do in this world is pay out on claims. In fact, studies have found that 17% of claims made to HealthCare.gov insurers and 18% of claims made to private insurers are denied—with some insurance companies rejecting nearly 50% of all claims.

In fact, some insurers employ several legal but underhanded tricks to avoid paying out on claims. Here are five common tricks insurance companies will use against you.

Moving as slowly as possible

The simplest trick an insurance company can play is to drag their feet on your claim—there’s a reason the phrase “deny and delay” has become linked to the insurance industry as a whole. This tactic works because your insurer knows you’re desperate for a settlement on your claim; that’s the whole point of insurance. The longer they make you wait, the more likely you’ll accept whatever they offer you, even if you know it’s much less than you’re entitled to.

Delay tactics vary, but can include:

• Documentation overload. Insurance companies sometimes request huge amounts of (sometimes unnecessary) documentation that takes a lot of time to procure and organize.

• Personnel swaps. Insurers may change the adjuster and other employees on your case, with each new person requiring some time to review the claim and get up to speed.

• Claiming no response. Your insurer asked for something, and you provided it. Weeks later they claim they never received it, and ask that you submit it again.

The best way to counter these tactics is meticulous record-keeping. If you feel that your insurer is asking for unnecessary documentation, ask them to explain why they need the documents—this sometimes makes document requests magically vanish. Send all written communications via certified mail and turn on read receipts for emails and other electronic communications.

Love bombing

Insurers are often extremely nice to you when you initially start dealing with them. They express sympathy, use the words “I’m sorry” in the context of your injuries or loss, and generally sound warm and friendly. That’s nice, and may even be genuine. But it’s also a tactic they use to delay or eventually find reasons to deny your claim.

Studies have found that apologies can be weaponized, and that people will tolerate delays and settle for less if they think the other party is taking responsibility or expressing empathy. Being excessively nice to you can fool you into thinking you can rely on the insurer to handle things on your behalf. This lets the company delay as much as possible, stringing you along. Love bombing like this can also get you to say things you shouldn’t say—as we’ll see in the next entry.

Twisting your words

Another reason an insurance adjuster or other employee might apologize to you? Because it can gently goad you into expressing regrets of your own which can then be used against you. Any expression of apology or regret could be interpreted as an admittance of fault. And establishing a friendly, sympathetic rapport with you could be a tactic to get you to say more than you should by speculating on causes or your responsibility in a claim.

For example, while speaking with a friendly adjuster about a car accident you were involved with, you might tell them you wish you’d noticed the other car driving erratically—if you had, you might have avoided the accident. This might seem like a simple observation, but it could be twisted into an admittance that you weren’t paying attention—and thus your claim is denied.

Insurers will also sometimes demand that you submit a recorded statement, often very quickly after the incident covered by the claim. They will sometimes state that this is best for you, as it will get the claim moving more quickly. But a rushed recorded statement can also lead to a denied claim—if you’re wrong or inaccurate about anything in your statement, this could be used as a basis for denial.

To avoid the tactics listed above, follow a few simple rules for dealing with insurers:

• Lawyer up. Hiring a lawyer to help you deal with insurance claims might seem like overkill, but you should always have a lawyer with you when speaking with insurers. An experienced attorney can ensure you don’t say anything that could hurt your claim.

• Never record. You’re typically not required to submit recorded statements, so don’t do it. Insist that all communications be done in person or over the phone, with your attorney present.

• Be suspicious. If an adjuster or other representative of the insurance company is overly friendly, don’t fall for it. Their sympathy might be genuine, but it can still get you into trouble if you let your guard down.

Rushing

Ironically, an effective tactic to delay and deny claims is to rush things. You file your claim, and before you can get organized, hire a lawyer, and recover from whatever happened, the insurer is on the phone, offering a settlement. This is often combined with pressure—like sending you a letter stating that you have two weeks to accept the settlement offer, or the company will “close the file.”

This is usually designed to reduce the payout—that easy, fast settlement is probably for a lot less than the amount you’re actually entitled to—and to force errors on your part. By rushing to pull together information, you’ll probably make mistakes that can then be used to deny the claim.

You can defend against this in two simple ways:

• Slow down. Ignore pressure to respond immediately or by arbitrary deadlines. Take your time, gather information, and respond when you’re ready. An attorney can help by acting as a buffer between you and the company.

• Know the statute. If your insurer tells you it will close your claim file, let it happen. It’s a meaningless administrative action. Your state’s laws will have a defined Statute of Limitations on your claim—a period of time when you’re legally allowed to pursue the claim. As long as you’re within that time period, you can force the insurer to re-open the claim.

Lowballing

If your insurer doesn’t think it can totally deny your claim, it may offer you a lowball settlement. You shouldn’t accept an insurance company’s calculations as gospel. In fact, the most important piece of information you can have about the claims process is that you are allowed to hire your own insurance adjuster. A public insurance adjuster works for you, not the insurance company, and will often arrive at a much higher figure for your claim.

Hiring your own adjuster also insulates you from internal delays, as you won’t have to wait on your insurer’s processes or play phone tag with their adjuster. In addition to an experienced lawyer, a public adjuster can also ensure that you have all the support and knowledge you need to navigate the often murky world of insurance claims.