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Your home insurance policy is there to protect your belongings and provide liability coverage. But it isn’t a blank cheque when it comes to claims.

Understanding why insurers may deny a claim can help you avoid some common pitfalls. Here are the top 10 reasons why a claim can be rejected.

1. Lack of coverage – A standard home insurance policy covers damage caused by fire, lightning and wind. But your policy will likely have exclusions too. Things such as sewer backup, for example, may require you to pay additional premiums to add them to your policy. If what has caused the damage to your home is specifically excluded in your policy, you can expect your insurer to deny your claim.
2. Policy coverage limits – All policies have specific coverage limits for certain things. That means you have a limit for what you can claim. If you have a $10,000 limit for jewelry but file a claim for $20,000, your claim will likely be rejected. It’s important to remember that things like jewelry, fine art and collections will require you to pay more premiums and be specifically named as riders in your policy.
3. Negligence – As a homeowner, you should know that the insurer expects your property will undergo regular maintenance and be kept in good condition. If you find that you have a leaky roof, for example, you should deal with it immediately. Otherwise, if the insurer find the damages for your claim are due to wear and tear and negligence on your part, a claim denial is possible.
4. Intentional acts or criminal activity – Most policies typically exclude coverage for losses or damages caused intentionally or by criminal activity. Ensure you take reasonable steps to protect your property from theft with alarms or other security measures.
5. Providing false information – Always be truthful on your insurance application. Once you make a claim, the insurer will look at every aspect of your application and compare it to present day. If they find anything that’s not true, your claim can be denied. Any intentional damage by the owner will also result in a denial. Being completely honest and keeping your insurer up to date about any changes to your property is the best course of action.
6. Non-disclosure of facts – Whenever you file a claim, be sure to document the damage and aftermath of the disaster. Lying about the scope and nature of the damage is fraud. The insurer will send out adjusters to survey the damage and if they find out you haven’t been truthful you will likely see your claim rejected.
7. Insufficient documentation – Always provide as much documentation as possible, including photos or videos. The onus is on you to prove your claim is valid. That’s why it’s useful to have a home inventory of your belongings. If you fail to deliver enough proof to satisfy the adjusters, your insurer can deny your claim.
8. Missing a filing deadline – Depending on your policy, there are specific time-sensitive filing deadlines to document claims. Whenever your home sustains damage from a covered peril, notify your insurer and start the claims process as soon as possible. Don’t have your claim denied because you waited too long.
9. Expired insurance policy – Should you accidently let your policy expire, you’re facing a certain denial if you file a claim. Insurers generally remind you about your renewal in advance. Deal with it then.
10. Non-payment of premiums – Missing payments on your home insurance or paying premiums late can cause your policy to lapse. Having missed or late payments on your record can also damage your credit rating and lead to more expensive premiums in the future. Keep up with your payments.

The Insurance Bureau of Canada has these tips for policyholders when filing a claim:

• Record all details about the event. Make a complete list of damaged, destroyed or stolen items. Take photos and videos.
• Contact your insurer as soon as you can.
• Review terms and conditions of your policy to confirm the loss/event is covered, exclusions, deductibles, coverage limits, replacement values, terms and conditions.
• Know the timelines to submit claims.
• Decide if the deductible you must pay is equal to or less than the total repair cost and if you have a claims-free discount and the repair cost is low.
• If you choose to file a claim, provide all required forms and documentation.
• Discuss with your insurer if you can use a supplier of your choice to repair property damage. You are always free to get a second opinion and evaluate repair quotes.

What to do if your claim is denied

1. Check for errors: Check your submission against your policy to make sure your insurer has grounds to deny it or if you made any errors.
2. Review the decision: Review the reasons why your insurer denied your claim. Reach out to your broker for assistance.
3. Second opinion: Although your claim has been declined, you have the right to appeal the decision. A second independent appraisal can be done.
4. Contact the General Insurance OmbudService. They offer free advice and will explain your options for filing a complaint.

RELATED READING:

Understanding insurance claims and disaster recovery

Understanding insurance dispute resolution