When is an insurance company liable for denying a claim?

Insurance can be a financial lifesaver in times of crisis, but what happens when an insurance claim is denied? It’s frustrating and confusing to face such a situation. Insurance companies have the responsibility of providing coverage to their clients when they need it the most, but sometimes claims are turned down for various reasons. In this blog post, we’ll explore when an insurance company is liable for denying a claim and how you can take action if your claim has been rejected. So let’s dive into the world of insurance liability!

What is insurance?

Insurance is a contract between an individual and an insurance company to protect against the risk of financial loss. In exchange for payment of premiums, the insurance company agrees to provide coverage in case of specific events such as accidents, illnesses, or natural disasters.

The purpose of insurance is to transfer the risk from individuals or businesses to the insurer. This helps mitigate the financial burden that would otherwise fall on the policyholder if an unexpected event occurred.

Types of insurance include life insurance, health insurance, auto insurance, property/casualty insurance and more. Each type has its own terms and conditions which are outlined in detail in your policy document.

Having adequate insurance coverage can give you peace of mind knowing that you are protected against potential losses that could cause significant financial hardship for you or your loved ones.

What is an insurance company’s liability?

When you purchase an insurance policy, you enter into a contract with the insurance company. As such, the insurer has certain legal and ethical responsibilities to fulfill towards its customers. This is known as their liability.

The primary responsibility of an insurance company is to honour the terms of the contract agreed upon in the policy document. They are legally bound to provide coverage for all valid claims made by their customers within the scope of their policy.

Insurance companies also have a duty to act in good faith towards their clients. This means that they cannot misrepresent or withhold information related to your coverage, deny legitimate claims without proper investigation or engage in any other unfair practices.