Wrongful Refusal to Pay Claims


Believe it or not - insurance companies routinely look for reasons to deny claims. Each claim they don’t have to pay adds to the insurance company's profits.

A life insurance policy is a contract between a policyholder and an insurance company. Consequently, when facts come to light that an insurer believes violates the terms of a policy, they often claim they have the right to deny coverage.


The issue, however, is determining whether or not an alleged violation actually justifies non-payment.

How insurance companies deny claims

A typical method for reducing claim payouts is for an insurer to rescind the policy by claiming there was incorrect or incomplete information on the life insurance application. Such refusal to pay may constitute a breach of contract and in violation of Texas laws prohibiting insurers from acting in bad faith.

Another tactic insurance companies use is to focus on extraneous terms in an effort to rescind a life insurance policy. For example:

  • An insurer may deny a death claim on an insured that died in a car accident but did not indicate on his original policy that he was a smoker.

  • Here, the insurer might argue that the policy was voided by false information. 

  • However, the alleged misrepresentation must be considered material under Texas law for the insurance company to rescind the policy and void life insurance coverage.

  • Further, even a material misrepresentation may not void coverage if the two year period of contestability has expired.

By employing such tactics, insurance companies know that many claimants will simply give up, either unaware of their legal rights or reluctant to consult an attorney. Or they may convince an unrepresented claimant to settle for pennies on the dollar.

We can help

If you need help in collecting life insurance funds, we have the litigation experience to help you prevail against big insurance companies.

If you feel that your claim was wrongfully refused by an insurance company, please contact us for a free legal review of your claim.

Consultations are free and confidential.