The Leading Causes of Claims Rejection and How to Avoid Them

claims rejection and denial

Let’s take a minute to talk about Pelumi, a friend of mine who had been paying his insurance premium on his precious bimmer regularly. A few weeks back, he got into an accident that damaged his car. Without thinking twice, he immediately took it to his mechanic. When he finally had to pay for the repairs, he decided to take advantage of his insurance cover. After filing the claim, he received a claims rejection email in less than a few hours. 

Situations like Pelumi’s make it look like Insurance companies are fraudulent, whereas he was at fault. The Insurance company cannot verify that he had an accident because there was no formal report plus he filed the claim late, after he had already repaired his car.

Small mistakes like this can cause your claims to get rejected, and these mistakes can be avoided. 

What To Do When Your Get a Claim Rejection

If you ever request a claim and it gets rejected or denied, don’t panic. The next important thing would be to read the remarks thoroughly.

If you read the comments on your denied claims and find it hard to understand it, reach out to your Insurer. So you can get an explanation for why you got your claims rejected.

Sometimes, your claims can be rejected wrongly, and can be corrected with a few steps. Other times, your claims can just get denied due to missing information or incomplete file documents. 

There’s also a clear difference between denied claims and rejected claims. Let’s look at that quickly. 

Difference Between Denied And Rejected Claims 

Denied Claims are processed but marked unpayable due to errors or a lack of prior authorisation. Some Issues that can cause a denied or rejected claim includes; missing information, using services outside your insurance company’s network (mainly for health insurance), filing for claims late, getting services that are not covered, or going over the covered services. 

You can always resubmit a denied claim. If you however, resubmit without finding out what the issue is, appealing and rectifying it, it could be recorded as double claims request, putting you at risk of getting rejected again. 

To resubmit a previously denied claim, determine why it was dismissed initially, then send in an appeal. Time is also an important factor when resubmitting denied claims. Each insurer allows only a specific time to send in a corrected claim. If this timeline is not met, the payer may deny the claim for timely filing. 

Rejected Claims are usually not processed first due to multiple errors or unmet requirements. For example, Suppose a client has third party auto Insurance and is filing for claims but missing out on important information on the third party affected. In that case, the claim gets rejected before it is even processed. 

Documentation is essential to an insurance company. That is why claims are not processed if there are a couple of errors or missing information. 

Once you receive rejected claims, you can correct the errors or provide the correct information as the case may be and submit it again without running at risk of getting denied due to multiple claims requests. 

I have compiled a list of reasons claims get denied or rejected. So you and your loved ones never fall into that trap.

Reasons Why You Can Get a Claims Rejection.

Claims rejection, a lot of times, fall into two major categories: process errors and policy coverage issues. Let’s now take a look at some of these reasons under these two categories and how to avoid them.

Examples of Process Errors that Cause Claims Rejection

1. Missing Or Incorrect Information: Whether intentional or unintentional, If you file a claim and omit necessary information, your claims will get rejected. That’s why you need to be very careful filing for your claims. Double-check that all the information you are submitting is accurate.

2. Lack Of Transparency: Sometimes, concealing information from your insurance company can lead to getting your claims denied. For example, If you have an underlying ailment or a job that can be directly linked to your hospitalisation, your claims automatically get denied for concealing information. 

Your Insurance premium is decided based so the information you give your insurance company. If your insurance has to pay more cover than your premium plan is eligible for, your claim will get rejected. 

3. Filing Late Claims: You should find out if your Insurer have a claims filing timeline and ensure you stick to it. For example, your claim will likely get denied if you are filing for a claim on a car accident five months after the accident. 

Reaching out to your insurer might not be a top priority during emergencies. Still, it is essential that if you cannot file a claim yourself, have a trusted person reach out to your insurance company and file a claim on your behalf. 

4. Missing Premium Payments: The validity of your insurance plan depends on you paying your premiums before or when they are due. If you don’t pay your premium when it is due or within the grace period provided, your claims will get rejected.

Policy Coverage Issues that Cause Claims Rejection

1. Using Providers Out Of Network: For some specific types of Insurance, Insurance companies already have a network of providers. Using providers outside this network (except during an emergency) disqualifies your claims. Typically, Insurers provide you with a list of all their providers when you start with your insurance. 

Ensuring you pick an insurance company with many providers to choose from is paramount when settling for an insurance company. 

2. Benefit Eligibility: All Insurance plans have specific services and procedures excluded from a plan. If, for example, you are requesting claims for a service that is not included in your plan’s benefits, you will end up with your claims denied. 

3. Exceeding Your Benefit: For instance, if your insurance plan allows you to use the gym 4 times a week and you proceed to use it 5 to 6 times a week, your insurance company will not be liable to pay for the cost of the extra days. Claims filed for exceeded benefits will always be denied by the insurer. 

Claims rejection is an avoidable experience and should not hinder you from getting insurance cover. Like the case of Pelumi, most policyholders after a denied claims experience have the opinion that Insurers don’t pay claims. Which is definitely not the case. Policyholders need to understand the policy documentation and requirements of the cover they are purchasing. For example, The Nigerian Insurers Association (NIA) recently revealed that insurers paid over N11 billion in claims for losses suffered during the 2020 #EndSARS protests.

In cases where you don’t understand the policy you are purchasing, ask for a clear explanation and have it documented to help you avoid a rejected claims experience if you ever have to make a claim.

See How Octamile Is Helping Nigerian Insurers to Automate Motor Insurance Claims.

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