Why insurance claims are denied

Denials are often less about “bad faith” and more about contract boundaries. Policies typically pay for specific events (called insured perils) and exclude others. Here are the most common drivers of denials, in plain language.

1) The cause is excluded

Many policies cover sudden, accidental events but exclude gradual damage or predictable deterioration. This is where terms like “wear and tear,” “mould,” “seepage,” and “maintenance” usually appear.

2) The event doesn’t meet the policy’s definition

Policies define words that feel ordinary: “flood,” “water damage,” “theft,” “vandalism,” “accidental,” and “sudden.” A claim can be denied if the facts don’t match the definition used in the contract.

3) A condition wasn’t met

Policies can include conditions such as maintaining heat, using reasonable care, or notifying the insurer within a certain time. These are not always intuitive, but they can matter to outcomes.

4) Documentation is missing or inconsistent

Insurers typically need proof of loss, timelines, photos, receipts, and sometimes professional reports. A claim can be denied if evidence doesn’t support the cause, timing, or scope.

5) Limits, sub-limits, or deductibles reshape the payout

Sometimes the claim isn’t “denied” — it’s approved but reduced because of deductibles, depreciation (ACV), policy limits, or special sub-limits for certain categories.