What is a Repudiated Claim? A Complete Guide

A repudiated claim is one of the possible outcomes when you file a claim with your insurance provider. But what exactly does it mean when an insurer repudiates a claim? This comprehensive guide will explain everything you need to know about repudiated claims.

What is Claim Repudiation?

Claim repudiation refers to when an insurance company completely denies or rejects responsibility for a filed claim. The insurer essentially states that the claim is not admissible or payable under the policy terms and conditions.

Some key things to know about claim repudiation:

• It means the insurer refuses to pay out on a claim and rejects financial responsibility.

• Repudiation indicates the claim is not covered under the insurance policy agreement.

• The insurer is asserting that the loss event, damages, or expenses are specifically excluded in the policy.

• Most often, repudiation happens after the claim assessment process when the insurer has reviewed the claim details.

• Common reasons for repudiation include terms or conditions not being met, exclusions applying, fraud, or misrepresentation.

• A repudiated claim is different from a denied, pending, or closed claim without payment.

So in essence, repudiation implies that the insurance company has processed and evaluated the claim, determined it to be ineligible, and therefore denied payment or coverage outright.

Why Do Insurance Companies Repudiate Claims?

There are a few common reasons why an insurance provider may wholly repudiate a filed claim:

• The cause of loss is not covered: If the loss event, damage, or expenses are specifically excluded under the policy terms, the insurer is not liable to pay the claim. For example, damage from floods may be excluded under a home insurance policy.

• Conditions are not fulfilled: Most policies have certain conditions that must be met for claims to be admissible, such as notifications within a timeframe. If these conditions are not fulfilled, the claim can be repudiated.

• Misrepresentation: If the policyholder provides false information or hides facts in the application process, the insurer can repudiate a claim due to misrepresentation.

• Fraud: If the claim is deemed or proven to be fraudulent in any way, the insurer will repudiate the claim and deny payment.

• Premiums not paid: If policy premiums are not paid and the policy has lapsed, any claims filed after the lapse can be repudiated by the insurer.

• Beyond time limit: Policies specify a time limit after a loss to file a claim. Claims filed after this deadline may be repudiated.

Examples of Repudiated Insurance Claims

To better understand repudiation, here are some examples across different insurance policy types:

• Health insurance: A policyholder files a claim for dental treatment, but routine dental care is excluded under the policy. The claim is repudiated since the treatment is not covered.

• Life insurance: The policyholder did not disclose a pre-existing medical condition on the application. When a death claim is filed, the insurer investigates, discovers the non-disclosure, and repudiates the claim due to misrepresentation.

• Home insurance: A homeowner files a claim for flood damage. Since flood damage is excluded under the policy, the insurer denies the claim completely.

• Auto insurance: After a minor accident, the policyholder files an exaggerated claim for damages. When the insurer investigates, they discover fraud and repudiate the inflated claim.

• Business insurance: A policyholder files a property damage claim 6 months after their policy has lapsed due to non-payment of premium. The insurer repudiates the claim since there was no active policy at the time of loss.

As you can see, the common thread is that the insurer investigates, finds the claim to be ineligible per the policy terms and conditions, and denies payment on those grounds.

Repudiated Claim vs. Rejected Claim

While repudiation and rejection may seem similar, there is an important difference:

• Rejected claim: This is when the insurer denies or does not approve a claim, often because more information is required or due to procedural issues. But there is still a possibility that the claim could get approved if supplemental data is provided.

• Repudiated claim: This is an outright or final denial of the claim. The insurer has evaluated the claim details and determined it is not eligible for coverage under the policy.

Some other differences:

• Rejection can occur before or after claim processing, while repudiation happens after claim assessment.

• Rejection is often temporary, but repudiation is a final denial.

• With rejection, there is a possibility the decision can be overturned if the policyholder furnishes additional details. But repudiation cannot be overturned or changed; the denial is permanent.

So in essence, a rejected claim has a chance of eventually getting approved, while a repudiated claim does not.

What to Do if Your Claim is Repudiated

Learning your claim has been repudiated can be frustrating and confusing. Here are some tips on what to do next if you find yourself in this situation:

• Review your policy: Read through your policy documents again in detail to understand which terms, conditions, or exclusions may have applied to result in repudiation.

• Ask questions: Contact your insurer and ask specific questions about why your claim was denied. Understand which policy provisions were not met.

• Request evidence: Ask your insurance company to provide the evidence, investigation records, or specific policy clauses on which they based the repudiation.

• Check for errors: Carefully review all claim documents and information to check for any mistakes, errors, or potential miscommunication.

• Discuss options: Speak to your agent or the insurer’s management to discuss if you have any options to appeal or review the repudiation.

• Consult experts: You can also consult legal or insurance experts to review your case. They can provide guidance on next steps.

• File a complaint: If you believe the repudiation is incorrect or unjustified, you can file a formal complaint with the insurer, insurance ombudsman, or regulatory bodies.

The key is to understand why your claim was denied, double check the accuracy, and leverage any options to get the decision reviewed or appeal the repudiation. Keep communicating with your insurer throughout the process.

Tips to Avoid Claim Repudiation

While you cannot prevent repudiation 100%, here are some tips to help minimize the chances of having a claim denied:

• Provide complete and accurate information when applying for coverage. Do not hide pre-existing conditions, make false statements, or misrepresent anything.

• Read and understand the policy terms, conditions, exclusions, waiting periods, etc. Ask questions if anything is unclear.

• Make premium payments on time to prevent policy lapses or cancellations.

• Notify the insurer as soon as possible after any loss event or incident. Meet all notification deadlines.

• Maintain detailed records related to the loss event, damages, expenses, treatments, etc. Keep copies of all documents submitted.

• Give the insurer complete information and respond promptly to any claim inquiries or investigations. Cooperate fully.

• Do not exaggerate the claim or submit forged or altered documents. This may constitute fraud.

• Ask questions and leverage agents/representatives to ensure you meet claim-filing requirements.

• If your claim is rejected, find out why and what information may be missing that you can supplement.

Following these best practices will help minimize situations where the insurer can repudiate claims due to contractual breaches, incomplete details, or suspicious circumstances.

Does Repudiation Mean I Cannot Claim in the Future?

If your claim is repudiated, you cannot file or get paid for that same claim again in the future. The decision is final. However, it does not necessarily mean you can never claim under that policy again.

You can still file new claims in the future for other covered loss events or damages, as long as you continue paying premiums and maintain the active policy. Just because one claim was repudiated does not make the entire policy null and void.

For example, if your home insurance claim was repudiated for flood damage, you can still subsequently file a claim for fire damage if that’s a covered peril. Or if your health insurance repudiated a dental procedure, you can still claim for hospitalization expenses later on.

The key is that each claim is assessed independently. As long as you fulfil the policy terms and conditions for the new loss, you retain the right to file future claims. But once a claim is repudiated, that specific claim cannot be claimed again.

Can You Appeal a Repudiated Claim?

In most cases, you cannot appeal or overturn a repudiated claim decision. Because repudiation means the insurer has already done a full investigation and permanently denied the claim, the decision is usually final.

However, there may be certain limited scenarios where you can potentially appeal, such as: