How to Write a Letter Denying a Claim

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As an insurance agent, you’re going to have to deny certain claims. When you deny a claim, you have to send the client a letter detailing your reason for denying it. This can be awkward, but it’s part of your job. Keep your letter professional and concise to make the interaction as straightforward as possible for you and the client.

TL;DR (Too Long; Didn't Read)

Be sure to include specific details about the denial or the client may sue the insurance provider for damages through a bad faith insurance claim.

What Are Some Reasons to Deny a Customer’s Claim?

Some common reasons to deny insurance claims are:

  • The damage isn’t covered by the client’s policy.
  • The client hasn’t paid her insurance premiums.
  • There is not enough evidence to support the claim.
  • The claim wasn’t filed on time.
  • The client gave incorrect information.  

This list is not exhaustive and there may be other reasons for denying the claim. The important point is to clearly state those reasons. If the customer is not happy with the reasons you provide, he may have a right to complain.

What Should be in your Claim Denial Letter?

Your denial letter should include:

  • Your name, position and company.
  • The date the claim was filed.
  • The date of your denial.
  • The reason for the denial.
  • The client’s policy number.
  • The claim number.

Refer to your company’s style guide and templates for denial letters in your industry to see if there is any additional information you need to include in your letter. For example, you might be required to refer to your state’s no-fault car insurance law if you live in one of the states that require car accident victims to file personal injury protection (PIP) claims.

How Do You Format a Claim Denial Letter?

Your claim denial letter should be formatted like any other business communication. Here is a sample template to follow:

Your company Your phone number Your email address

The client’s name and contact information, formatted the same way you formatted your name and contact information above.

RE: Claim denial DATE: The calendar date of your letter

Dear (Client’s name)

[Body of letter]

Sincerely,

Your name

State the number of enclosures in parenthesis here.

How Do You Write the Body of the Letter?

In the first paragraph, state that the letter is in response to the client’s claim. Name the claim number and the client’s policy number as well as the date the claim was made. Provide a brief overview of the nature of the claim. In the second paragraph, detail the steps of your company’s investigation of the claim. In the next paragraph, politely but clearly state that the company is denying the client’s claim based on its findings through the investigation.

Your concluding paragraph should provide instructions for the client to contact you if he has any questions or additional comments about the claim or the denial. Thank the client for the claim and his business. State that although you had to deny this specific claim, you hope to continue your professional relationship with the client in the future. If you have any enclosures, note them here.