Underpaid claims are when you receive less payout from your insurance for a submitted claim than you were expecting. This can occur with all types of insurance, such as medical, car, and property insurance. It can lead to delays in payment, financial issues, and emotional distress.
If your claim isn’t paid out in full, you don’t have to agree with the insurer’s decision. There are things you can do to receive the full amount owing to you.
Read the rest of this article to explore common reasons why claims are underpaid, how you can prevent underpaid claims, how you can appeal unpaid claims, and how a lawyer can help you.
Why Do Insurance Companies Underpay Claims?
There are many reasons why your claim might not be paid in full. These include the following:
- Vague or confusing policies. If there is ambiguous information in the policy, insurers can use this to justify underpaid claims.
- Lack of documentation. When submitting a claim, you want to provide the correct documentation so that the insurer has all the information they require to process and pay claims.
- Coding errors. Incorrect codes for medical claims can result in underpaid or denied claims. This is a prime example of admin-related issues that can cause problems.
- Lack of reasons for denial. If you’ve submitted a claim that was denied but the reasons weren’t addressed, this could cause partial payment.
- Insufficient investigations. When the insurance company assesses the damage that led to a claim, such as for property insurance, they might not do this accurately, resulting in underpayment.
- Delays in processing claims. Some insurance companies intentionally take longer to process claims so that when they provide less payment than what you were expecting, you might feel pressured to accept it. You might do this instead of waiting longer for the full amount or to avoid the stress involved with disputing the payout.
How Can You Prevent Underpaid Claims?
In some cases it’s not within your control to prevent your claims from being underpaid by your insurance company, such as if you’re dealing with an insurer who is operating in bad faith. However, there are some general ways in which you can avoid underpaid claims from causing delays and stress.
Maintain Proper Insurance Records
Sometimes submitting insufficient documentation with your claim can cause issues and underpayment. It’s worth compiling records for your insurance over time, such as medical bill receipts, policies, property repair costs, and more.
This will ensure that you have everything you need when submitting a claim to your insurer, and it increases its chance of success.
Know What’s Required When Submitting Claims
Errors or lack of information when submitting your insurance claims can result in issues such as nonpayment or underpayment. To prevent this from happening, it can help to know exactly what’s required when submitting claims.
For example, for some medical insurance claims, you might require pre-authorization from your insurance company prior to seeking medical care. Doing this long before claiming will help you. It pays to be prepared!
Ask your insurer questions before submitting claims so you know what processes to follow. These might also be mentioned in your insurance policy.
Avoid a Lack of Disclosure
It’s important to disclose all your information to your insurance company so that they can’t use a lack of disclosure as a reason to deny or underpay your claims.
For example, with car insurance, if the information you withheld would have caused you to pay a higher monthly insurance premium (such as if you didn’t disclose using the car for business purposes), your claim payout could be reduced according to the premium you should’ve been paying.
How Can You Handle an Insurance Dispute for Underpayment?
Although you might pay out of pocket to cover the amount of money your insurer isn’t providing, this can cause financial issues. There are other ways to deal with an insurance dispute over underpaid claims.
Submit an Appeal
Send an appeal for the underpaid claim to your insurer, via their internal process, so that they can reassess the claim. Ask for them to explain why they are underpaying the claim and submit the required documentation to let them review it.
When sending an appeal, it can strengthen your claim to include a second opinion or estimate, such as from another doctor or contractor. By doing your research, you’ll show the insurance company that you’re serious about getting paid and they’re likely to take your appeal more seriously.
Consult with a Lawyer
You should consult with a lawyer to help you deal with an underpaid claim from your insurer. They will help you to figure out the best option for getting your money back.
Here are other ways in which your lawyer will assist you.
- They will review your insurance policies to explain vague or confusing terms, helping you to identify your coverage, rights, and duties.
- If you think you’re dealing with a bad faith insurer, your lawyer will help you hold them accountable. This can include filing lawsuits against them.
- They will deal with your insurance company on your behalf and negotiate with them to recover your funds.
- They will assess your damages so that you receive the appropriate compensation for them.
- They will collect evidence to support your claim.
- They will pursue litigation if efforts to negotiate with the insurer fail.
- They have in-depth understanding of the insurance process and laws to help you navigate the situation.
- They will ensure you submit all required paperwork in a timely fashion so there are no further delays or issues.
Do you need a lawyer for an underpaid insurance claim?
You have the right to fair compensation for claims, according to what’s included in your insurance policy.
Consult with a lawyer from ContractsCounsel, an online legal network connecting clients with vetted lawyers on the platform. They will investigate your case and strengthen your position.
By hiring a lawyer, you’ll have an effective strategy to receive payment and minimize your losses.
