What Happens When a Private Disability Insurance Claim is Denied?

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Many individuals purchase a private disability insurance policy, whether it’s short-term or long-term, to cover expenses in the event of an unexpected illness or injury. These policies allow some peace of mind and help individuals provide for themselves and their families during a traumatic or difficult time.

However, even when policyholders make dutiful payments on the policy, insurance companies can still deny those private disability insurance claims. What many people don’t know is that they have options – a denial isn’t the end of the line, but it is the beginning of a longer process.

What is private disability insurance?

It’s common to have a long-term or short-term disability policy available through your employer, but you can also purchase a private policy. However, there are some key differences to know about private disability insurance policies.

One major difference is that with private insurance policies, the policy is subject to underwriting requirements. Instead of simply signing up for coverage through your employer, you’ll likely have to complete a medical exam and submit several years of your medical history. The insurance company wants to determine the state of your health and identify any potential risks before they issue your policy. This also impacts the cost of your policy, as the insurance company may charge more if you’ve experienced serious health issues.

Another important distinction is the length of coverage – group or employer policies may cover a wide range of time, whereas private insurance policies typically only cover a few years, depending on your individual circumstances.


What’s the next step after an insurance denial?

If you submit a disability claim on your policy and it is denied, the company will inform you via formal communication like a letter or email. This is where many people assume they don’t have options, but that’s not the case.

You may have the option to appeal the denial, which usually involves filing some paperwork, writing a communication about why you’re disputing the denial, and often requires some medical documentation. If the claim is still denied after you’ve appealed it, your next step is likely litigation.

Common reasons for denial include:

  • Lack of medical documentation/evidence
  • Failure to follow medical advice
  • Failure to submit proper documentation


Bad Faith Cases for Private Disability Insurance

When a lawsuit is initiated due to the denial of private disability insurance coverage, many of those cases fall under the umbrella of “bad faith.” This is usually defined as: “The intentional refusal to fulfill a legal or contractual obligation, misleading another, or entering into an agreement without intending to or having the means to complete it.”

This is a serious accusation, and insurance companies will aggressively fight these cases. When a policyholder has upheld their part of the contract by paying their premiums on time, the insurance company must provide substantial information as to why the claim was denied. In addition, the policyholder also has an obligation to fully dispute the reason for the claim denial and explain why the denial was in bad faith.

If you find yourself in this situation, an attorney can help you fight a wrongful disability insurance denial. It’s critical to find a lawyer with extensive experience in disability insurance claims, as these cases are complex and time-consuming.

The McGonigle Law Team has decades of experience with these types of cases and is available to talk about your situation. Reach out to our team for more information.


The information contained herein is for general purposes only and does not constitute legal advice.

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