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What To Do When Your Insurance Company Won’t Pay

Aneeqa Reza
What To Do When Your Insurance Company Won’t Pay

Insurance is a contractual arrangement between an individual or an entity (the policyholder) and an insurer (company). It involves the transfer of risk from the policyholder to the insurer in exchange for a premium. The insurer agrees to compensate the policyholder for specific financial losses or liabilities, as outlined in the insurance policy.


There are several types of insurance policies available, each designed to cover different aspects of life and mitigate various risks. Here are some common types:

·      Life Insurance: This provides financial protection to beneficiaries in the event of the policyholder's death. It ensures that loved ones are taken care of and can cover expenses like funeral costs, debts, or loss of income.

·      Health Insurance: These policies are offered by health insurance companies in Sri Lanka and cover medical expenses incurred by the policyholder due to illness, injury, or hospitalization. It helps in managing healthcare costs, including doctor visits, hospital stays, prescription medications, and sometimes preventive services.

·      Auto Insurance: This type provides coverage for vehicles against physical damage and liability resulting from accidents, collisions, theft, or other incidents. It protects policyholders from financial loss, including repair costs, medical expenses, and legal liabilities.

·      Homeowners/Renters Insurance: These protect property owners against losses and damages to their homes and personal belongings due to perils such as fire, theft, vandalism, or natural disasters. It offers similar coverage for personal belongings to those who rent their homes.

·      Property Insurance: They cover commercial properties against risks such as fire, theft, natural disasters, or liability claims. It helps businesses recover from property damage and protects their assets.

·      Liability Insurance: This provides coverage for legal liabilities and financial obligations that arise from personal injury, property damage, or negligence claims made against the policyholder. It protects individuals or businesses from costly lawsuits and legal expenses.

·      Disability Insurance: It offers income protection to individuals who are unable to work due to a disability or injury. It provides a portion of their regular income to help cover living expenses and maintain financial stability.


Insurance policies benefit policyholders in several ways:

·      Risk Transfer: Insurance allows individuals or businesses to transfer the financial burden of potential losses to an insurer or company. It provides peace of mind, knowing that they are protected against unforeseen events.

·      Financial Security: They provide a safety net and financial protection against unexpected events. They can help policyholders recover from losses, pay for medical expenses, repair or replace damaged property, and maintain their standard of living.

·      Coverage for Legal Liabilities: It protects policyholders from costly legal liabilities and provides funds for legal defence and potential settlements if they are found responsible for causing injury or property damage to others.

·      Long-Term Savings and Investment: Some policies, such as life cover, offer the opportunity for policyholders to accumulate savings or investments over time. These policies may provide benefits beyond the coverage of risk, serving as a tool for future financial planning.

·      Peace of Mind: Such policies, like the best medical insurance in Sri Lanka, offer peace of mind by reducing anxiety and worry about potential financial losses. Knowing that one is adequately protected against risks allows individuals and businesses to focus on their goals and day-to-day activities without the fear of substantial financial setbacks.


Specific benefits and coverage details of insurance policies can vary based on the terms and conditions outlined in each policy. It is best to carefully review and understand the terms of an insurance policy before purchasing to ensure it aligns with your needs and expectations.


What are the instances when insurance companies make payments to the policyholder?

Insurance companies make payments to policyholders in various instances, depending on the type of policy and the specific circumstances covered. Here are some common situations where insurers may make payments to policyholders:

·      Death Benefit: In the case of life cover, when the policyholder passes away, the company pays a death benefit to the designated beneficiaries. This payment helps cover funeral expenses, debts, and provides financial support to the deceased's dependents.

·      Medical Expenses: These typically cover a portion of the policyholder's medical expenses. When the policyholder receives medical treatment, the company reimburses or directly pays the healthcare provider for covered services, including doctor visits, hospitalization, surgeries, medications, and diagnostic tests.

·      Property Damage: These companies make payments to policyholders for property damage caused by covered perils. For example, in homeowners or renters’ insurance, if a policyholder's property is damaged due to fire, theft, natural disasters, or other covered events, they compensate the policyholder for the repair or replacement costs.

·      Auto Accident: In this type, if the policyholder is involved in an accident, the company may pay for the repair costs of the policyholder's vehicle or compensate for its total loss, depending on the coverage and circumstances. Additionally, they may also cover medical expenses for injuries sustained in the accident.

·      Liability Claims: These policies provide coverage for legal liabilities. If the policyholder is held legally responsible for causing bodily injury or property damage to others, the company may pay for legal defence costs, settlements, or judgments up to the policy's limits.

·      Disability Income: These policies pay a portion of the policyholder's income if they become disabled and are unable to work. The insurer provides regular payments to help cover living expenses during the disability period.

·      Business Interruption: If a business experiences a covered event that disrupts its operations, such as a fire or natural disaster, the insurer may make payments to compensate for lost income and help cover ongoing expenses during the period of interruption.


Such policies have specific terms, conditions, and exclusions that determine when and how payments are made. Policyholders should carefully review their policies and understand the coverage details to know under what circumstances they are eligible for payment from the insurer.


What should you do if your insurance company does not pay a claim?

There can, however, be circumstances when an insurance company will not make a payment on a claim, even if you have the best health insurance in Sri Lanka. If your insurance company does not pay a claim that you believe is valid and covered by your policy, you can take the following steps:

·      Review your policy: Carefully read your policy to understand the coverage, exclusions, and conditions. Make sure you have a clear understanding of what is included and excluded from your policy.

·      Contact the company: Reach out to the company to inquire about the reason for the denial or non-payment of your claim. Request a detailed explanation and ask for a written response outlining the specific policy provisions or reasons for the denial.

·      Gather supporting documentation: Collect all relevant documentation related to your claim, such as receipts, medical records, photographs, or any other evidence supporting your case. This evidence can help strengthen your argument and provide proof of your claim's validity.

·      Review the denial letter: If the company has provided a denial letter, carefully review it to understand their rationale for the denial. Pay attention to any deadlines or procedures for filing an appeal, as outlined in the letter.

·      Understand the appeals process: These companies typically have appeals process for policyholders to challenge claim denials. Familiarize yourself with the specific steps, timelines, and requirements for filing an appeal. This information is usually provided in the denial letter or in the policy documentation.

·      File an appeal: Prepare a formal written appeal to the company, including all relevant documentation and a clear explanation of why you believe the claim should be paid. Follow the appeals process outlined by them, including submitting the appeal within the specified timeframe.

·      Seek assistance: If you are encountering challenges in dealing with your insurer or are unsure how to proceed, consider seeking assistance from professionals. This may include consulting an attorney specializing in insurance law, contacting consumer advocacy organizations, or seeking guidance from state insurance departments or regulatory authorities.

·      Document all communication: Maintain a record of all communication with your insurer, including dates, times, names of representatives spoken to, and summaries of conversations. This documentation can be useful if you need to escalate the issue or involve third parties.

·      Explore alternative dispute resolution: If your appeal is not successful or if you are unable to resolve the issue directly with the company, you may consider alternative dispute resolution methods. This can involve mediation or arbitration, which can help in reaching a resolution outside of court.

·      Legal recourse: If all other avenues have been exhausted, you may choose to pursue legal action against the company. Consult with an attorney to understand the viability of your case and the appropriate legal steps to take.

Aneeqa Reza
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