Coverage Denials

Facing a Denied Claim

When you pay for insurance in California, you expect your provider to honor their promise if you experience a loss. Many policyholders are shocked to receive a coverage denial, especially during a stressful time after property damage, wildfire loss, or another hardship. If this has happened to you, know that you are not alone. Coverage denials are a common issue in California, and there are steps you can take to challenge the decision.

If your claim was denied after a wildfire, you may also want to learn more about property damage claims and wildfire-related insurance disputes.

What Is a Coverage Denial?

A coverage denial occurs when your insurance company refuses to pay your claim, saying the event falls outside your policy terms or for another reason. This can involve homeowner’s insurance, renters insurance, auto policies, or even business interruption insurance.

Denials often cite exclusions, missed deadlines, alleged misrepresentations, or claim that the damage is not covered. Sometimes, the insurer may misinterpret policy language or fail to conduct a fair investigation.

Key California Insurance Laws

California law gives you important rights as a policyholder. The California Insurance Code (Sections 790.03 and 790.09) requires insurers to handle claims fairly and in good faith. Unfair claim practices—like denying a claim without a reasonable investigation—are prohibited.

The California Department of Insurance (CDI) also sets strict rules for how insurers must respond to and investigate claims. If you believe your carrier acted unfairly, you can file a complaint with the CDI.

Some insurance disputes may also involve federal law, especially if your policy is governed by the Employee Retirement Income Security Act (ERISA), such as some employer-sponsored health plans.

Common Reasons for Denials

Understanding why your claim was denied can help you plan your next step. Common reasons include:

• Alleged non-covered events (such as certain types of water damage)
• Policy exclusions (like wildfire or earthquake unless separately covered)
• Late claim filing
• Alleged misrepresentations or incomplete information
• Dispute over the value of the loss

If you suspect your insurer is acting in bad faith, review our page on bad faith claims.

Insurer Obligations in California

Insurance companies in California must:

• Respond promptly to claims and communications
• Conduct a reasonable investigation before denying a claim
• Clearly explain the reason for a denial in writing
• Provide a copy of your policy upon request
• Not misrepresent the facts or your policy terms

If your denial letter is vague or lacks details, your rights may have been violated.

Steps to Challenge a Denial

If you believe your claim was wrongfully denied, you can take action:

• Request a detailed explanation and policy reference for the denial
• Review your policy language closely
• Gather all supporting documents (photos, receipts, repair estimates)
• Write a formal appeal to your insurer
• File a complaint with the California Department of Insurance if you suspect unfair practices

Sometimes, insurers reverse their decision after receiving more information or when policyholders push back. For a step-by-step guide, see how to challenge wrongful coverage denials.

Damages and Potential Recovery

If your claim was wrongly denied, you might recover:

• The original claim amount owed under your policy
• Additional damages if the denial caused further losses
• In some cases, interest or statutory penalties
• Legal costs if the court finds the denial was in bad faith

Review maximizing insurance claim recovery for more tips on what you may pursue.

Frequently Asked Questions about Coverage Denials in California

What should I do if my insurance claim is denied in California? Start by carefully reviewing your denial letter and your insurance policy. Gather any supporting documentation, request clarification from your insurer, and consider submitting a formal appeal. If you believe the denial was unfair, you can file a complaint with the California Department of Insurance and seek legal advice.

Are there deadlines for appealing a coverage denial? Yes, most insurance policies have deadlines for appeals and lawsuits. In California, you often have one to two years from the date of denial to take legal action, but timeframes vary by policy. Act quickly to avoid missing your window.

Can my insurer deny a claim without investigating? No. California law requires insurers to conduct a reasonable investigation before denying a claim. Failure to do so may violate the Insurance Code and could be considered bad faith.

What if my claim was denied after a wildfire? If your property was damaged by wildfire and your claim was denied, review your policy for wildfire coverage and exclusions. You may have grounds to challenge the denial, especially if your policy should have covered the loss.

Can I recover more than the policy amount if my insurer acted in bad faith? If a court finds that your insurer denied your claim in bad faith, you may be able to recover damages beyond your original claim, including emotional distress and, in some cases, punitive damages.

Get Support from Attain Law

Coverage denials can be overwhelming, but you do not have to face your insurance company alone. Attain Law’s experienced attorneys understand California insurance law and will help you fight for the benefits you deserve. If your claim was denied or underpaid, contact us today for a free consultation or call (888) 970-8627. We’re here to support you through every step.