A denial of a mortgage life insurance claim can leave families in a difficult financial position, especially when they were counting on that payout to help cover the mortgage. Fortunately, a denial does not have to be the end of the road. With the right approach, many denied claims can be reversed or resolved through legal action. If you have Virginia life insurance claim issues call us.
Here are the most important steps to take after your claim has been denied.
Step One: Ask the Insurance Company for a Clear Explanation
Your first move should be to request a detailed denial letter from the insurance company if you have not already received one. This letter should outline the specific reason the claim was rejected. In some cases, the denial is based on something fixable, such as a missing document, a signature error, or confusion about the policy terms.
Example: In one case, a mortgage life insurance claim was denied because the insurer claimed the policy was inactive. Our client produced payment records showing that all premiums were paid on time, and the denial was promptly reversed without litigation.
Step Two: Review the Policy and the Denial Reason Carefully
Once you receive the denial letter, compare the insurer’s explanation with the language of the actual policy. Check whether the denial was based on a specific exclusion, a lapse in coverage, or an alleged misstatement on the application. Insurers often misinterpret or misapply policy terms, and you may be able to point out errors or inconsistencies.
Example: A family was denied a mortgage life insurance payout after the insurer claimed the death was excluded due to a pre-existing condition. We reviewed the policy and proved the condition had been fully disclosed during the application process. The claim was ultimately approved.
Step Three: File a Formal Appeal with Supporting Evidence
If the denial is not immediately resolved, the next step is to submit a formal appeal. Most mortgage life insurance policies allow you to challenge a denial within a set time frame. Your appeal should include a clear, written explanation of why the denial is incorrect along with supporting documents such as:
Medical records or death certificate clarifying the cause of death
Payment history showing continuous premium payments
Correspondence or application documents supporting your position
Example: We helped a claimant win an appeal after the insurer denied a payout for alleged nonpayment. By supplying bank records and emails showing that the policyholder had automatic withdrawals set up, we proved that the policy never lapsed.
Step Four: Consider Negotiating a Settlement
If the appeal is denied or ignored, it may be possible to negotiate a resolution directly with the insurer. Insurance companies sometimes offer partial settlements to avoid litigation, particularly when confronted with legal representation. Having an experienced insurance lawyer communicate on your behalf can increase your leverage and lead to a fairer outcome.
Example: In one mortgage insurance dispute, the insurer offered just 30 percent of the death benefit. After we intervened and presented strong evidence, the insurer agreed to pay the full claim plus interest to avoid being sued for bad faith.
Step Five: Take Legal Action if Necessary
When an insurer refuses to honor a valid claim and negotiations go nowhere, you may need to take legal action. A lawsuit or mediation may be the only way to compel the insurer to pay what is owed. A skilled life insurance attorney can guide you through the litigation process and hold the insurer accountable for acting in bad faith or breaching the contract.
Example: We represented a client whose mortgage life insurance claim was denied based on an alleged misstatement in the original application. We filed suit and uncovered internal emails showing that the insurer was aware of the issue at the time of approval but chose to overlook it until the policyholder died. The court ordered the insurer to pay the full benefit.
Call us today.