Life Insurance Claim Denied: Determining If You Should File a Lawsuit [Part II]

J.P. Gonzalez-Sirgo
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Founder of J.P. Gonzalez-Sirgo, P.A.

This is the second-installment of our two-part blog designed to help guide beneficiaries in evaluating their legal rights if they are denied a death benefit under a life insurance policy.  As we point out in Part I of this blog series, it is not the case that every denial of coverage justifies litigation by an insured.  However, many denials by insurers constitute a breach of contract and/or insurance bad faith.  Part I of this blog focused on steps to take when working with an insurance company prior to considering a lawsuit.  Part II focuses on potential issues that might be open to challenge when a policy is denied.

One of the key reasons to initiate a lawsuit against your insurance company for the wrongful denial of your claim is that it forces the insurer to revisit the denial of your claim.  If the insurance company has issued a denial of your claim, the insurance carrier has no reason to put any further effort into reassessing your situation.  The threat of a lawsuit or pending litigation can provide an effective incentive to spur negotiations and a potential settlement with your insurer. 

The insurance company will take your threat of a lawsuit much more seriously if you have retained an attorney who is handling communications and negotiations related to your claim.  Insurance companies have absolutely no concern about losing in litigation against a layperson without an attorney, so the threat of litigation is illusory until you retain an experienced Miami Insurance Claims Attorney.  There are certain factual situations where the insurer might be particularly vulnerable when beneficiaries challenge the denial of payment of a death benefit. 

Three examples of situations where the insurance company’s denial might be successfully challenged in court include the following:

Improper or Misleading Conduct by the Agent: When you meet with the insurance agent, the agent might cut corners when attempting to consummate the deal and obtain a commission.  Any information that is discussed by you and the insurance agent may be legally deemed to constitute “disclosed information.”  If the agent fails to include relevant information, such as a disclosure you make about a past injury or medical condition, a beneficiary may have recourse when the insurer subsequently denies a beneficiary’s claim for misrepresentation, fraud, or non-disclosure.  The insurance agent might also be liable for compensating the beneficiary under the agent’s errors and omissions insurance.  Depending on the specific facts and circumstances, the insurance carrier also might be barred from denying the claim based on the inaccurate, missing or false information if the reason the insurance application was misleading was because of the agent.

Temporary Coverage after Completing an Application: Many life insurance policies provide temporary coverage for periods between the completion of the policy application and finalization of the policy.  While the policy might provide coverage during this period, the insurer will only have received a single premium payment when the insured dies, so the insurance company will be extremely diligent about looking for a grounds to deny payment.

Insured Passes Away during the Contestability Period: The insurance carrier can deny a death benefit and cancel a life insurance policy during the contestability period if any provisions or language under the policy permit such a denial.  The insurer will carefully investigate claims made during the contestability period.  The insurance company will request medical records and other documents and/or information to identify a basis for challenging the validity of the claim.  The most common grounds for such a denial would be an undisclosed medical condition or injury.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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