Appealing an Insurance Claim Denial

December 27, 2012, 10:30AM. By Heidi Turner

Los Angeles, CAIf you have had an insurance claim denied because of bad faith insurance practices, regardless of how you purchased your insurance policy you may want to consider hiring an insurance lawyer to help you through the appeals process. That is because there are different rules governing insurance policies, and that rules that govern your policy depend on how you purchased it.

Regardless of how you purchased your policy, bad faith insurance is still bad faith insurance, and you have the right to appeal the denial. Insurance companies have a legal responsibility to act in good faith, and not deny a claim on unreasonable grounds. For example, some insurance companies will cancel a policy after a claim is made on the basis that the claimant gave incorrect information when he purchased the policy, even if that information has nothing to do with the reason for the claim. In other cases, companies will delay filing paperwork, or even claim that the paperwork has not been received, forcing the claimant to fill out the same paperwork repeatedly.

If an insurance policy is purchased through an employer, it is covered by the Employee Retirement Income Security Act (ERISA). When your claim is denied, you have only 180 days to file an appeal of the denial, but you must file an appeal first. You cannot file a lawsuit until after the appeal, and only if the appeal is denied. Furthermore, you will not have the opportunity to testify at an ERISA claim appeal, so your file and the paperwork contained in that file are vital to your case.

Even if the insurance company has acted in bad faith, the most you can recover are attorney's fees and compensation for medical coverage, so there is no compensation for punitive damages or pain and suffering. This means that there is less incentive for insurance companies to practice good faith insurance with ERISA-covered insurance policies.

If your legitimate claim is unreasonably denied, do not just assume the insurance company is acting in good faith or following ERISA laws. Filing an appeal with the help of an experienced attorney may ensure your rights are protected??"and your finances are covered while you seek medical treatment.

Policyholders who purchased their insurance through a broker or on their own are not covered by ERISA and are able to file a lawsuit as soon as the claim is denied. They are also able to file for punitive damages and pain and suffering. Despite the ability to claim higher damages, claimants who purchased their own insurance still report being treated unfairly and unethically by insurance companies. That is why they file lawsuits to ensure their rights are protected.