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Claims Denied in Whole and in Part

For most policyholders, the claims process after a loss is confusing. Is insurance doing the right thing? Are they paying me the benefits I’m owed in my insurance claim? These are frustrating questions and I hear them from my clients again and again. Even more often, there lies a common issue with people being denied claims. Fortunately, there are regulations in California that require an insurer to explain the bases of their denials, whether the denied claims are in whole or in part.

Under the California Code of Regulation, title 10, sec. 2695.7(b)(1), it states:

“Where an insurer denies or rejects a first party claim, in whole or in part, it shall do so in writing and shall provide to the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge. Where an insurer’s denial of a first party claim, in whole or in part, is based on a specific statute, applicable law or policy provision, condition or exclusion, the written denial shall include reference thereto and provide an explanation of the application of the statute, applicable law or provision, condition or exclusion to the claim. Every insurer that denies or rejects a third party claim, in whole or in part, or disputes liability or damages shall do so in writing.”

This is an important regulation in that it requires the insurance provider to explain the factual and legal basis for their denial in whole or part of an insurance claim. For example, if an insurer denies a water damage claim based on it being long term damage, the insurer must then explain what facts it discovered to show it was long term. The iprovider of insurance must also explain how the policy determines what is long term damage. Every policy must clearly state why such exclusions preclude insurance coverage.

Furthermore, as held in White v. Western Title Ins. Co., 40 Cal.3d 870, 881 (1985), “any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer and … if semantically permissible, the contract will be given such construction as will fairly achieve its object of providing indemnity for the loss to which the insurance relates.’ The purpose of this canon of construction is to protect the insured’s reasonable expectation of insurance coverage in a situation in which the insurer-draftsman controls the language of the policy. Its effect differs, depending on whether the language to be construed is found in a clause providing coverage or in one limiting coverage. [4] ‘Whereas coverage clauses are interpreted broadly so as to afford the greatest possible protection to the insured … exclusionary clauses are interpreted narrowly against the insurer.”

If you find yourself confused from denials in your claims process, feel free to reach out to us here at Fire & Flood Attorneys. The laws are on your side. Find out what counts as bad faith and how a property insurance lawyer can help. Contact us today!

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