The 3 Most Common Reasons for Denial of Professional Disability Insurance Claims
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UPDATED: Jul 1, 2014
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During the 1970’s and 80’s, insurance companies campaigned extensively to attract executives, physicians, and other professionals, to purchase disability insurance policies that offered low monthly payment rates and high benefit payout amounts based on professionals’ high salaries. During the 1990’s, the financial environment changed for both the insured professionals and the insurance companies, and as a result, paying out the policies became bad for business – placing the insured and the insurance company in adversarial positions. Insurance companies now see these policies as extremely expensive and look for any opportunity to deny coverage or terminate the policy.
Due to the large number of professional disability claim denials, it is necessary to obtain the advice and counsel of an experienced attorney as early in the claim process as possible. Representation during the early stages of the claim is essential to protect your interests and insure that you are paid the money you are owed under the policy.
The 3 Most Common Reasons a Claim Is Denied
Insurance companies provide three main explanations for denying coverage that professionals should closely scrutinize with the assistance of an attorney:
(1) Not “fully disabled” within the insurance company’s definition of disabled.
It is very common for an insurance company to deny coverage based on their analysis and findings that the insured is not disabled under the definition of “disabled” in the policy. The most common form of this denial is due to the insured not being “fully disabled” or is only “partially disabled”. These terms of art are used to describe a circumstance when the insured can still perform certain duties of the profession while suffering from the condition they are claiming causes disability.
(2) Finding of “not disabled” due to a change in occupation.
After realizing that you can no longer perform the essential duties of your profession, it is common to transition your career to better accommodate the disability. However, in order to qualify under the terms of the professional disability policy, the insurance companies will compare your disability with the duties of the occupation you have held for the last year prior to filing. Therefore, if you have transitioned your career to better accommodate your disability BEFORE filing the disability claim, the claim will be denied because you do not qualify as disabled.
An experienced attorney will provide counseling during all phases of the claim process and will design an effective career transition plan while also protecting your benefit asset.
(3) Failure to cooperate with the investigation.
After filing a claim, the insurance company will conduct an investigation to determine if you qualify under its interpretation of “disabled.” During this investigation, the insurance company may request extensive documentation of your disability, as well as financial statements and tax returns. Failure to comply with proper requests for documentation will result in the insurance company denying coverage and terminating the policy for failure to cooperate with the investigation.
An experienced attorney will advise you as to what constitutes a proper request and what is improper. Refusing to produce improper requests from the insurance company is well within your right of privacy, will not affect the policy or benefits, and doing so can protect you from the insurance company’s attempts to find any information that may possibly be used to deny your claim.
It is not uncommon for claim denial explanations to be inaccurate representations of the insurance company’s responsibility to perform under the terms of the professional disability policy. If you have had a claim denied for any reason, you are entitled to contact an attorney to dispute the decision, but it is in your best interests to reach out to a lawyer before the claim is even filed.
Contact an Insurance Attorney Immediately
If you are unable to continue working due to a long-term injury, your professional disability insurance policy is an essential asset to your continued success, livelihood, and prosperity. With insurance companies closely scrutinizing disability claims, it is essential to be proactive by consulting an attorney as soon as you recognize that you cannot perform the duties of your profession and need to file an insurance claim. Professional disability insurance is an asset worth fighting for, and the best way to avoid claim denial is to consult an attorney before taking action.