AD&D Denied Life Insurance Claims
Accidental Death and Dismemberment (AD&D) policies—life insurance policies that pay out only in the event of an accident—are popular for several reasons. First, they can be purchased separately or as an inexpensive add-on to other life insurance. Second, AD&D policies are offered through a variety of channels that other types of life insurance typically are not. For example, you may be offered AD&D coverage through your credit card issuer.
Insurance Companies Have an Incentive to Deny AD&D Claims
One of the key reasons that AD&D policies are so popular often turns into a liability when a beneficiary files a claim under the policy: compared with other types of life insurance, accidental death and dismemberment coverage is cheap. That’s good news when you’re choosing a policy and paying your premiums, but not such good news when you file a life insurance claim.
The reason this type of life insurance coverage is so inexpensive is that very few people actually die in accidents. That means the risk for the insurance carrier is low. Most people will pay their AD&D premiums for years and never make a claim, meaning that the odds are in favor of the insurance company collecting premiums without ever having to offer anything in return. That’s very profitable.
When an insured does die in an accident, though, it’s a losing proposition for the insurance company. The carrier might have received a few hundred dollars in premiums and then find itself processing a claim for $100,000 or more.
Life Insurance is a Contract
Fortunately, the life insurance company doesn’t get to decide whether or not to pay a claim based on its own bottom line. Accidental death and dismemberment coverage, like any type of life insurance, involves a contractual relationship. The policy spells out exactly what coverage will be provided and under what circumstances. If the company tries to change the rules and deny a valid life insurance claim, the law is on your side.
Common Reasons for Denial of AD&D Claims
Since accidental death and dismemberment coverage only pays out in the event of an accident, the most obvious means of denying a claim is to assert that the cause of death wasn’t an accident.
AD&D Policies Do Not Pay Out on Suicides
It may seem that it would be quite clear in most cases that an accidental death had been the result of an accident, but there are two tactics insurance companies commonly use to attempt to avoid payment of life insurance benefits under AD&D policies. The first is to allege that the cause of death was suicide rather than an accident. In situations involving events like single car accidents and falls, it may be difficult or impossible to determine conclusively whether a crash was intentional, or whether a fall might have been a jump.
Some insurance companies will take advantage of uncertainty to classify the death as a suicide and deny the life insurance claim. Fortunately, the insurance company doesn’t get to decide whether the death was the result of an accident or suicide. And, the burden of proof falls on the insurance company if it chooses to assert that the death was a suicide.
Intoxication and Other Contributing Factors
Many accidental death and dismemberment policies contain an exclusion for accidents occurring while the insured was intoxicated by alcohol or drugs. Some exclude accidents caused in part by a medical condition. For example, if a person known to suffer from epilepsy had a seizure that caused a fatal automobile accident, and AD&D carrier might deny the life insurance claim because the known medical condition was a contributing cause of the accident.
In both of these situations, the insurance company must prove that the accident fell under a policy exclusion. While some exclusion-based denials are valid, others are an attempt by the insurance company to transform a possibility into a fact in order to save money. The beneficiary of a person who died in an accident under this type of circumstances should never accept the insurance company’s conclusion as final.
A Life Insurance Claim Denial Attorney Can Be Your Best Resource
When a life insurance company denies a valid claim, the company is hoping that you’ll take them at their word and move on without collecting the benefits you’re owed. Make sure that you have reliable information and professional guidance before making a decision about fighting the insurance company. You can start right now by scheduling a free consultation.