If you’re staring down a five- or six-figure property loss and a claims denial letter, you’re far from alone. Insurance coverage disputes are more common than most policyholders realize. A 2024 study by Weiss Ratings claimed that the nation’s 13 largest homeowners insurance companies denied nearly half (47.5%) of all claims made the previous year. The insurance industry routinely delays, underpays, or denies valid claims, particularly after widespread catastrophes.
Still, knowing you’re not alone doesn’t make the experience any less frustrating. You’ve paid your premiums faithfully, only to be met with evasions, technicalities, or silence when you need coverage the most. That’s why knowing the critical steps to take when your insurer refuses to pay is essential. Without an experienced advocate by your side, fighting back against your insurance company can feel like an uphill battle, but we’re here to help you understand your rights, preserve your legal options, and move forward with confidence.
What Is an Insurance Coverage Dispute?
First, the basics. An insurance coverage dispute arises when there’s a disagreement between a policyholder and their insurer about the extent or applicability of coverage under an insurance policy. These disputes usually emerge after you file a claim and the insurer either refuses to pay, pays less than the policyholder believes is owed, or delays payment without reasonable justification. At its core, a coverage dispute challenges whether the insurer is fulfilling its contractual obligations as outlined in the insurance policy.
Why Do Insurance Coverage Disputes Happen?
The causes of insurance coverage disputes can vary widely, but even under the best circumstances, they often stem from the inherent complexity of policy documents and the adversarial nature of the claims process. Even when you’ve complied with every policy requirement, your insurer may interpret key provisions differently—or deploy tactics that prioritize minimizing payouts over honoring your claim.
Below are some of the most common reasons disputes over coverage issues occur.
- Vague or Ambiguous Policy Language: Insurance policies are dense legal contracts, often filled with undefined terms or confusing exclusions. Ambiguities can lead to sharply different interpretations between the insurer and the policyholder.
- Omissions or Misunderstandings at the Time of Underwriting: If important facts were omitted—intentionally or not—during the application process, insurers may later assert that coverage never applied in the first place.
- Disagreements with Adjusters: Insurance adjusters may undervalue your damages, dispute the cause of loss, or rely on biased vendor estimates that don’t reflect the true scope of the claim.
- Complex or High-Stakes Claims: Disputes frequently arise in high-dollar areas such as:
- Property damage, especially following natural disasters
- Liability insurance, where fault and policy limits are contested
- Business interruption claims, which involve complex calculations and causation debates
Understanding these root causes can help you recognize when your insurer’s position may be more about protecting their bottom line than upholding their contractual duty.
The Benefits of Understanding Your Insurance Policy
Reading and understanding your policy in advance is one of the most effective ways to protect yourself. Far too many people only discover the fine print of their insurance policy after disaster strikes—and by then, misinterpretations or overlooked exclusions can carry significant financial consequences.
Key terms like “actual cash value,” “replacement cost,” and “covered peril” aren’t just technical jargon—they can determine whether your claim is approved or denied, and by how much. Familiarity with your declarations page, coverage limits, exclusions, and endorsements gives you a critical advantage when it comes time to assert your rights under the policy.
It’s also important to remember that your insurance policy is a binding legal contract. That means disputes over coverage are legal matters, best understood and addressed by professionals with legal training. At Merlin Law Group, we specialize in interpreting the complex language of insurance policies and advocating for policyholders whose legitimate claims have been mishandled. By partnering with experienced counsel, you level the playing field against insurers that bank on your confusion.
>>Have questions about a dispute with your insurance company? Contact the team at Merlin Law Group.
Key Issues That Lead to Insurance Disputes
While every insurance coverage dispute has its own facts and context, if you’ve run into obstacles during the claims process, chances are one of the following issues is at play.
Bad Faith Practices by Insurers
Insurance companies owe you a duty of good faith and fair dealing, meaning they must evaluate and process your claim honestly and promptly. When they fail to do so—by unreasonably delaying payment, denying coverage without proper investigation, or using pressure tactics to force a low settlement—they may be acting in bad faith. These actions can give rise to breach-of-contract claims and separate bad-faith claims for damages under state bad-faith laws.
Misinterpretation of Policy Terms
Policy language is often ambiguous or contains terms with meanings that are well established for courts and insurance professionals but less clear for the average person. Insurers may interpret key provisions narrowly to limit or deny coverage, even when a broader or more reasonable reading would support your claim. Courts often resolve ambiguities in favor of the policyholder, but that typically requires litigation or legal pressure. Legal expertise becomes essential when there’s a dispute over what your policy covers.
Denial Due to Technicalities
Even a valid claim can be denied if the insurer claims you missed a filing deadline, failed to provide requested documentation, or didn’t mitigate your damages quickly enough. These procedural issues are an everyday basis for denial, often catching policyholders off guard.
But not all technical denials are legitimate—most states follow the Notice-Prejudice Rule where there must be a showing that any lapse materially prejudiced their ability to investigate or adjust your claim. A knowledgeable attorney can help challenge denials based on these technical defenses.
Steps To Take When Your Insurer Refuses to Pay
When your insurer refuses to pay a valid claim, taking the proper steps early can significantly strengthen your position and protect your rights under the policy. Here’s the path to follow.
1. Review Your Policy Terms
Start by carefully reading through your insurance policy, paying close attention to sections that define covered perils, exclusions, disclaimers, and conditions for filing a claim. Determine whether your specific loss falls within the scope of coverage, and whether you complied with requirements like timely notice or documentation.
If your insurer’s denial relies on an interpretation that doesn’t align with the policy’s actual language, or if you spot errors or omissions in how your claim was processed, you may have substantial grounds to contest their decision.
2. Document Everything
Thorough documentation is one of the most powerful tools in a coverage dispute. Your insurer will rely heavily on the record you provide to evaluate the claim, so the more detailed and well-organized your evidence, the harder it becomes for them to justify denial or underpayment. Start documenting immediately after the loss occurs, and update your file throughout the claims process.
Be sure to include:
- Photos and Videos: Capture the full extent of property damage from multiple angles and under good lighting. Time-stamped media is especially helpful.
- Repair Estimates: Obtain multiple written estimates from licensed contractors or specialists to establish the true value of the loss.
- Receipts and Invoices: Keep records of emergency repairs, temporary housing, cleanup services, and replacement items.
- Your Communications with the Insurer: Maintain a detailed log of every interaction with your insurer, including dates, names, and summaries of phone calls or emails. This record can be critical in proving delays, misstatements, or shifting explanations.
Good documentation helps level the playing field and ensures a clear paper trail to support your version of events.
3. Challenge the Coverage Decision
You have the right to challenge your provider’s decision, and doing so promptly and strategically can make all the difference. Start by requesting a written explanation of the denial or settlement amount, then compare it against the terms of your policy coverage. You may also benefit from obtaining a second opinion, such as an independent contractor’s damage assessment or a revised valuation of your loss. In many cases, hiring a licensed public adjuster can help rebalance the scales; these professionals work on your behalf to evaluate the claim and negotiate with the insurer.
4. Engage the Right Professionals
Legal intervention may be the next step if discrepancies or bad faith conduct persist. Property insurance attorneys bring a depth of knowledge that general practitioners and policyholders may not possess. They can spot misapplications of exclusions, improper valuations, unreasonable delays, and procedural missteps that could entitle you to policy benefits and additional damages under bad faith statutes.
In serious disputes—especially those involving significant discrepancies in property claims or prolonged underpayment—having representation from a law firm specializing in insurance law can dramatically shift the power dynamic in your favor. Insurers often change their tune once they realize you’re prepared to assert your rights with the help of counsel.
At Merlin Law Group, we understand both the legal intricacies and the human impact of insurance coverage disputes, and we’re committed to leveling the playing field so that you, rather than your insurer, get to decide what recovery looks like. For 40 years, our team has focused exclusively on insurance law, and in that time, we’ve helped our clients recover more than $2 billion in improperly denied or delayed claims.
5. Consider Arbitration or Mediation
Not every insurance coverage dispute ends up in court, nor should it. An attorney can represent you through alternative dispute resolution (ADR) methods such as mediation and arbitration, which can be highly effective in resolving claims without the time and expense of litigation. These approaches are designed to facilitate a fair resolution while avoiding the procedural hurdles of a formal court case.
Mediation involves a neutral third party who helps both sides negotiate a mutually acceptable settlement. It’s typically non-binding, meaning you’re not forced to accept the outcome unless you agree.
Arbitration, on the other hand, is a more formal process where an arbitrator—or a panel of arbitrators—reviews evidence and issues a binding decision, similar to a private trial. (Some insurance policies include arbitration clauses that require this route before litigation is permitted.)
6. Pursue Litigation if Necessary
When all else fails, litigation may be the only path to a fair resolution. Compelling the insurer to defend its denial or underpayment in a court of law governed by the rules of evidence, legal precedent, and judicial oversight provides a structured environment for resolving the dispute.
Pursuing insurance coverage litigation is a serious step, but it’s warranted in cases involving egregious underpayment, wrongful denial of high-value claims, or clear patterns of bad faith. If your insurer has failed to conduct a proper investigation, ignored material facts, or relied on unjustified technicalities to deny coverage, a lawsuit may not only secure the benefits you’re owed under the policy—it may also entitle you to punitive damages and attorney’s fees. With experienced insurance counsel by your side, litigation can serve as both a remedy and deterrent, holding your insurer accountable while helping you rebuild what you’ve lost.
How Long Does It Take To Resolve Insurance Disputes?
The timeline for resolving an insurance coverage dispute depends heavily on the method you pursue
- Mediation and informal negotiation can produce results within weeks or a few months, particularly if both parties are motivated to avoid protracted conflict.
- Arbitration typically takes longer—often several months—due to the need for evidence gathering, hearings, and the issuance of a binding decision.
- Litigation, by contrast, is the most time-intensive option. Depending on the complexity of the case, court backlog, and whether appeals are involved, it can take several months to a few years to fully resolve a coverage lawsuit.
While some delays are unavoidable, others stem from preventable issues like incomplete documentation, missed deadlines, or poor communication with the insurer. You can reduce unnecessary setbacks by keeping meticulous records, responding promptly to requests for information, and ensuring all filings are accurate and timely.
How Merlin Law Group Can Help
You bought insurance for peace of mind, not red tape, fine print, and corporate runarounds. When your claim becomes a conflict, you deserve more than automated emails and shifting explanations. You deserve advocates who know how to make the system work as it should.
We’ve spent over four decades standing up to insurance companies that put profits over policyholders. Our attorneys understand the tactics insurers use—and how to beat them. Whether you’re dealing with a denied claim, a lowball offer, or a complex dispute over policy terms, we’re here to help you get the full compensation you deserve.
Let’s make your insurer take your claim as seriously as you do. Contact us today for a consultation.
FAQs About Insurance Coverage Disputes
What Are the Odds of Winning an Insurance Appeal?
The odds of claimants winning an insurance appeal depend on the strength of documentation, the clarity of policy language, and whether the insurer acted within the bounds of good faith. While there’s no guaranteed outcome, policyholders who present a well-supported challenge, especially with the help of legal counsel or a public adjuster, often reverse or improve the insurer’s initial decision.
How Can I Resolve a Disagreement with My Insurance Company Over Coverage?
Start by thoroughly reviewing your policy coverage to understand what’s covered and under what conditions. Request a detailed explanation of the denial or disputed decision in writing, and gather supporting documentation—such as estimates, photos, and expert reports—that counter the insurer’s position. You can then file a formal appeal or request reconsideration. If these steps don’t yield results, consider hiring a licensed public adjuster or consulting a property insurance attorney for legal advice.
What Are Common Types of Business Insurance Claims?
Common types of insurance claims include:
- Property Damage, such as losses from fire, storms, or vandalism
- Business Interruption, which covers lost income due to a covered event that halts operations
- General Liability, which often arises from third-party injuries or property damage that occur on the business’s premises
- Professional Indemnity, which is filed against an individual or company for financial losses resulting from alleged negligence or errors in providing professional services
Other frequent claims involve professional liability (errors and omissions), particularly for service-based businesses, and cyber liability, which addresses losses from data breaches or cyberattacks. Each type of claim comes with its own coverage nuances and potential disputes, making it essential for business owners to understand their policies in detail.
