Insurance claim denials: real cases and how they can be overturned

When an insurance company denies a claim, the message is usually clear and seemingly final: “Not covered”, “does not apply”, “the policy does not include this situation”.

For many policyholders, this feels like the end of the road. In practice, however, a large number of claim denials are not due to lack of coverage, but to administrative errors, overly restrictive interpretations, or poorly handled claims from the start.

At MataSeguros, we regularly work on claims that arrive already denied, many of them in complex contexts such as fires, floods and also after DANA events, where the massive volume of claims increases the risk of mistakes.

Below are real cases (anonymised) and what went wrong in each one.

Denials due to inheritance and outdated policies

One of the most common situations involves inherited properties.

The scenario is usually the same: • the policyholder passes away • the property is inherited • the policy remains active but is not fully updated

When a loss occurs — in some cases after a DANA — the insurer: • questions who is entitled to claim • disputes the policyholder’s standing • or attempts to close the claim altogether

In several cases we handled, the policy was valid, premiums were paid, and the risk clearly existed. The denial was based solely on a formal issue, not on a lack of coverage.

The key was: • proving continuity of the insured risk • demonstrating the policyholder’s good faith • showing that the loss was unrelated to the ownership change

These denials are not final, even if they are presented as such.

Denial due to late payment caused by a banking error

Another frequent reason for denial is an alleged late premium payment.

In one case, the delay resulted from: • a bank error • a technical issue beyond the policyholder’s control

Despite a clean payment history, the insurer attempted to deny coverage after a loss caused by heavy rainfall.

What mattered was: • proving there was no intent to avoid payment • reviewing the legal suspension periods • analysing the conduct of both parties prior to the loss

Not every delay justifies a valid denial.

Incorrect risk description: one floor insured, another flooded

In another case: • the property had two floors • the insured surface area was correct • but the policy mistakenly stated “first floor”

The flood affected the second floor, and the insurer denied the claim arguing that this area was not insured.

The issue was not the capital or the risk, but a description error attributable to the insurer.

It was proven that: • the insured object was the entire property • the capital matched the whole building • the drafting error could not harm the policyholder

Result: the denial was overturned.

Restrictive clauses misinterpreted: bar vs beer hall

One of the most illustrative cases involved a denial based on declared business activity.

The insurer applied a restrictive interpretation distinguishing between: • cocktail bar • beer hall

to limit coverage.

However: • opening hours were practically identical • the premium paid was essentially the same • there was no economic advantage in declaring one activity over the other

In other words, there was no bad faith or risk concealment.

Once the clause was analysed, it became clear that the insurer’s interpretation had no real impact on the insured risk, making the denial unsustainable.

Denials caused by incorrect claim handling

In other cases, especially medical or liability claims, the problem was not the policy itself, but how the claim was filed.

Claims processed as individual instead of collective, or under the wrong coverage, were denied even though the damage clearly existed.

Reframing the claim correctly was enough to unlock the compensation.

What many denials have in common

Despite different facts, the pattern is often the same: • rushed claim handling • overly restrictive policy interpretation • administrative errors shifted onto the policyholder • premature acceptance of a “no” as final

During events like DANA, where claim volumes are massive, these issues multiply.

What policyholders can do after a denial

After a denial, a policyholder can: • request written technical justification • review both general and specific policy terms • assess whether the clause applied is valid • submit additional documentation • formally request a claim review

In many cases, the key is not the damage itself, but how it has been interpreted and processed.

👉 https://mataseguros.com/blog/danos-viviendas-negocios-reclamar-seguro

Conclusion

A denied claim does not necessarily mean the loss is not covered. Very often, it means the claim has been mishandled, incompletely analysed or interpreted in a biased way.

Especially in complex losses — fires, floods or DANA events — a technical and legal review can make the difference between accepting an unfair loss or recovering the compensation that truly corresponds.