Why Some Insurance Claims Get Denied (And How to Avoid It)
Last Updated: January 2026
Reading Time: 10 minutes
Author: Todd Conn, TCDS Insurance Agency
You pay your insurance premiums faithfully for years. Then you have a claim. And the insurance company denies it.
You're furious. You feel betrayed. You assume the insurance company is cheating you.
Sometimes that's true. But more often, claims get denied for legitimate reasons—reasons that could have been avoided if you understood your policy.
This article explains the most common reasons insurance claims get denied, shows you real examples, and teaches you how to avoid claim denials.
The Uncomfortable Truth About Claim Denials
Most claim denials are legitimate.
Not all of them. Insurance companies do sometimes deny valid claims, and that's when you need an agent fighting for you. But the majority of denials happen because:
- The loss isn't covered by the policy
- The policyholder didn't maintain the property
- The policyholder misrepresented information
- The claim was filed too late
- The policyholder violated policy conditions
Understanding why claims get denied helps you avoid it.
Top 10 Reasons Home Insurance Claims Get Denied
1. Flood Damage (Most Common Denial)
What Happened: Heavy rain causes flooding. Water enters your home and causes $50,000 in damage. You file a claim. Denied.
Why It Was Denied: Standard homeowners insurance does NOT cover flooding. You need separate flood insurance.
What "Flooding" Means:
- Water entering from outside the home
- Rising water from rivers, creeks, lakes
- Surface water from heavy rain
- Storm surge from hurricanes
What IS Covered:
- Water damage from burst pipes (internal)
- Roof leaks from wind-driven rain
- Appliance leaks or failures
How to Avoid This: Buy separate flood insurance through NFIP or private carriers ($300-$3,000/year depending on flood zone).
Real Example: Birmingham homeowner had heavy rain flood their basement. $30,000 damage. Claim denied—flooding not covered. They didn't have flood insurance because "we're not in a flood zone." 30% of flood claims come from low/moderate risk areas.
2. Maintenance Issues / Wear and Tear
What Happened: Your roof leaks and damages your ceiling. You file a claim. Denied.
Why It Was Denied: The roof was 25 years old and in poor condition. The leak was due to wear and tear, not a sudden covered event (wind, hail, fire).
What Insurance Covers:
- Sudden, accidental losses (tornado, fire, lightning, vandalism)
What Insurance Doesn't Cover:
- Gradual deterioration
- Lack of maintenance
- Wear and tear
- Aging systems
How to Avoid This: Maintain your property. Replace aging roofs, HVAC systems, and plumbing before they fail. Insurance covers sudden accidents, not deferred maintenance.
Real Example: Pelham homeowner had a pipe burst in the attic. $20,000 water damage. Claim denied—the pipe was corroded and had been leaking slowly for months (visible water stains). Insurance covers sudden pipe bursts, not gradual leaks from lack of maintenance.
3. Vacancy or Unoccupied Home
What Happened: Your home was vacant for 90 days while you renovated it. Someone broke in and vandalized it. $15,000 damage. Claim denied.
Why It Was Denied: Most homeowners policies exclude coverage if the home is vacant for more than 30-60 consecutive days.
Why This Exclusion Exists: Vacant homes have much higher risk of:
- Vandalism
- Theft
- Frozen pipes (no heat)
- Undetected damage
How to Avoid This:
- Notify your insurance company if your home will be vacant
- Buy vacant home insurance (more expensive but provides coverage)
- Have someone check the property regularly
Real Example: Cullman homeowner inherited a house and left it vacant for 6 months while deciding what to do. Vandals broke in and caused $25,000 damage. Claim denied—home was vacant beyond policy limits. They didn't know they needed to notify their insurance company.
4. Mold Damage
What Happened: You discover mold in your home. $10,000 remediation cost. Claim denied.
Why It Was Denied: Most policies exclude mold unless it's caused by a covered peril (e.g., sudden pipe burst).
What IS Covered:
- Mold resulting from sudden water damage (burst pipe, roof leak from storm)
- Limited mold coverage ($5,000-$10,000 sublimit)
What ISN'T Covered:
- Mold from long-term moisture or humidity
- Mold from slow leaks
- Mold from lack of ventilation
How to Avoid This:
- Address water damage immediately (within 24-48 hours)
- Maintain proper ventilation
- Fix leaks promptly
- Consider buying additional mold coverage ($50-$100/year)
Real Example: Birmingham homeowner had a slow leak under their bathroom sink for months. Mold developed. $8,000 remediation. Claim denied—mold was from gradual leak, not sudden covered event.
5. Sewer Backup (Without Coverage)
What Happened: Sewer backs up into your basement. $15,000 damage. Claim denied.
Why It Was Denied: Standard homeowners policies exclude sewer backup. You need to add water backup coverage.
What Causes Sewer Backup:
- Heavy rain overwhelms sewer system
- Tree roots block sewer line
- Sump pump failure
How to Avoid This: Add water backup coverage to your policy ($50-$100/year). Covers sewer backup, sump pump failure, and drain backups.
Real Example: Hoover homeowner had sewer backup during heavy rain. $12,000 damage to finished basement. Claim denied—no water backup coverage. Adding it would have cost $75/year.
6. Dog Bite (Excluded Breed)
What Happened: Your dog bites a visitor. $30,000 medical bills and lawsuit. Claim denied.
Why It Was Denied: Your policy excluded coverage for certain dog breeds (Pit Bulls, Rottweilers, Dobermans, etc.).
Why This Exclusion Exists: Certain breeds have higher bite frequency and severity, leading to higher claims costs.
How to Avoid This:
- Disclose your dog breed when buying insurance
- Find a carrier that covers your breed (some do)
- Buy separate canine liability insurance if needed
Real Example: Birmingham homeowner had a Pit Bull. Didn't disclose it to insurance company. Dog bit a delivery driver. $40,000 lawsuit. Claim denied—breed was excluded. Homeowner paid out of pocket and was sued personally.
7. Intentional Damage
What Happened: Your angry ex-spouse damages your home. $10,000 damage. Claim denied.
Why It Was Denied: Intentional acts by household members are excluded.
What IS Covered:
- Vandalism by strangers
- Accidental damage by household members
What ISN'T Covered:
- Intentional damage by anyone living in the home
- Damage during domestic disputes
How to Avoid This: This is difficult to avoid, but understand that insurance covers accidents and external threats—not intentional acts by people you know.
8. Earth Movement (Earthquake, Landslide, Sinkhole)
What Happened: Minor earthquake causes foundation cracks. $20,000 repair. Claim denied.
Why It Was Denied: Standard homeowners policies exclude earth movement (earthquakes, landslides, sinkholes, mudslides).
How to Avoid This:
- Buy separate earthquake insurance if you're in a risk area
- Some states offer sinkhole coverage as an endorsement
Real Example: North Alabama homeowner had foundation damage from a minor earthquake. $15,000 repair. Claim denied—earth movement excluded. They didn't know Alabama has earthquake risk (New Madrid fault zone).
9. Business Activities at Home
What Happened: Client slips and falls at your home-based business. $50,000 lawsuit. Claim denied.
Why It Was Denied: Homeowners policies exclude business activities. You need separate business insurance.
What Requires Business Insurance:
- Home-based businesses with clients visiting
- Daycare services
- Rental properties
- Any commercial activity
How to Avoid This: Buy business insurance (general liability, professional liability) if you run any business from your home.
Real Example: Pelham homeowner ran a home daycare. Child was injured. $100,000 lawsuit. Homeowners claim denied—business activity excluded. Homeowner had no business insurance. Personally liable for $100,000.
10. Failure to Report Claim Promptly
What Happened: Hail damages your roof in March. You don't notice until June. You file a claim in July. Denied.
Why It Was Denied: You failed to report the claim promptly, and the insurance company couldn't verify the damage was from the March hailstorm.
How to Avoid This:
- Inspect your property after storms
- Report claims immediately (within days, not months)
- Document damage with photos and dates
Real Example: Cullman homeowner had hail damage in April. Didn't notice until August when they started seeing leaks. Filed claim in September. Denied—too much time passed, couldn't verify damage was from April storm vs. subsequent storms.
Top 5 Reasons Auto Insurance Claims Get Denied
1. Driving Under the Influence
What Happened: You cause an accident while intoxicated. $100,000 in damages. Claim denied.
Why It Was Denied: Most policies exclude coverage for accidents caused while driving under the influence of alcohol or drugs.
How to Avoid This: Don't drink and drive. Ever. Not only is it illegal and dangerous, but your insurance won't cover you.
2. Unlisted Driver
What Happened: Your 19-year-old son (who lives with you but isn't listed on your policy) crashes your car. $30,000 damage. Claim denied.
Why It Was Denied: All household members of driving age must be listed on your policy. Failing to list them is misrepresentation.
How to Avoid This:
- List all household members of driving age
- If they don't drive your car, explicitly exclude them
- Notify your insurance company when household members change
Real Example: Birmingham parent didn't list their college student son on their policy to save money. Son came home for summer, crashed the car. $40,000 damage. Claim denied—unlisted driver. Parent paid out of pocket.
3. Using Vehicle for Business Without Commercial Coverage
What Happened: You're driving for Uber/Lyft/DoorDash. You cause an accident. Claim denied.
Why It Was Denied: Personal auto policies exclude commercial use. You need commercial auto insurance or rideshare coverage.
How to Avoid This:
- Notify your insurance company if you drive for Uber, Lyft, DoorDash, etc.
- Add rideshare endorsement ($10-$20/month)
- Buy commercial auto insurance if you use your vehicle for business
4. Mechanical Failure
What Happened: Your engine seizes due to lack of oil. $5,000 repair. Claim denied.
Why It Was Denied: Auto insurance covers accidents and theft—not mechanical failures or maintenance issues.
What IS Covered:
- Collision damage
- Theft
- Vandalism
- Weather damage (hail, flood if you have comprehensive)
What ISN'T Covered:
- Mechanical breakdowns
- Wear and tear
- Maintenance issues
How to Avoid This: Maintain your vehicle. Consider buying mechanical breakdown insurance or extended warranty if you want coverage for mechanical failures.
5. Lapse in Coverage
What Happened: Your policy lapsed due to non-payment. You have an accident. Claim denied.
Why It Was Denied: No active policy = no coverage.
How to Avoid This:
- Set up automatic payments
- Keep your insurance company updated on address changes
- Respond to cancellation notices immediately
How to Avoid Claim Denials: 10 Rules
1. Read Your Policy
Boring? Yes. Important? Absolutely.
Know what's covered and what's excluded. If you don't understand something, ask your agent.
2. Disclose Everything
Don't hide information to save money.
- List all household drivers
- Disclose prior claims
- Disclose dog breeds
- Disclose business activities
Misrepresentation voids your policy. Saving $200/year isn't worth losing $50,000 in coverage.
3. Maintain Your Property
Insurance covers accidents, not deferred maintenance.
- Replace aging roofs before they leak
- Fix plumbing issues promptly
- Maintain HVAC systems
- Address water damage immediately
4. Buy the Right Coverage
Don't skip coverage to save money.
- Add water backup coverage ($50-$100/year)
- Buy flood insurance if you're near water
- Add rideshare coverage if you drive for Uber/Lyft
- Buy umbrella coverage if you have assets to protect
5. Report Claims Immediately
Don't wait weeks or months.
- Report claims within 24-48 hours
- Document damage with photos
- Keep receipts for emergency repairs
6. Notify Your Insurance Company of Changes
Life changes affect your coverage.
- New household members
- New vehicles
- Home renovations
- Business activities
- Extended vacancies
7. Don't Commit Fraud
Exaggerating claims or staging accidents is fraud.
- Don't inflate damage amounts
- Don't claim pre-existing damage
- Don't stage accidents
Fraud voids your policy and can result in criminal charges.
8. Keep Your Coverage Active
Don't let your policy lapse.
- Set up automatic payments
- Respond to cancellation notices
- Keep your address updated
9. Work with an Agent
An agent advocates for you.
- We know what's covered and what's not
- We help you avoid claim denials
- We fight for you when claims are denied unfairly
10. Document Everything
Photos, receipts, and records win disputes.
- Take photos of your property annually
- Keep receipts for major purchases and improvements
- Document damage immediately after a loss
When Claims Are Denied Unfairly
Not all claim denials are legitimate. Sometimes insurance companies deny valid claims.
Common Unfair Denials
- Lowball settlements (offering less than actual damage)
- Misinterpreting policy language (claiming exclusions that don't apply)
- Delaying claims (hoping you'll give up)
- Requesting excessive documentation (creating barriers)
What to Do If Your Claim Is Denied Unfairly
- Call your agent immediately (we'll review the denial and fight for you)
- Request a written explanation (insurance company must explain denial)
- Review your policy (verify the exclusion actually applies)
- File an appeal (most companies have internal appeal processes)
- Contact the Alabama Department of Insurance (they investigate unfair denials)
- Hire a public adjuster or attorney (if the claim is large and clearly valid)
This is where having an independent agent matters. We fight for you. We know policy language. We know when denials are unfair. And we push back.
The Bottom Line
Most claim denials are avoidable.
- Buy the right coverage
- Maintain your property
- Disclose everything
- Report claims promptly
- Work with an agent
Some claim denials are unfair. When that happens, you need an agent who will fight for you.
Our Recommendation
Understand your policy. Know what's covered and what's not.
We'll explain your coverage in plain English. We'll identify gaps. We'll help you avoid claim denials. And we'll fight for you when claims are denied unfairly.
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About TCDS Insurance Agency: We're an independent insurance agency serving Birmingham, Pelham, and Cullman, Alabama. We represent 10+ carriers and have the freedom to find the right coverage for you—and fight for you when claims are denied unfairly.