After being their customer for more than 10 years, they still denied my insurance claim. How could they? Why?— Ooh my God, what next now?

After being their customer for more than 10 years, they still denied my insurance claim. How could they? Why?— Ooh my God, what next now?

Insurance claims get denied… Yes, you heard right—not all are paid. And here we have all the reasons as to why this happens and ways on how it can be avoided.

The key role of insurance is to offer protection to an individual, a firm or an organization against the loss suffered and arising from the unforeseen circumstances. Insurance gives the insured(s) a kind of security and peace of mind because they know that in the case of the peril occurring, they will be compensated.

An insurance contract is sealed by regular money paid to the insurers (insurance companies) by the insured called premium. And depending on the type of the insurance cover taken, some premiums are paid annually, monthly, or even weekly.

Therefore, the insured pays premiums to get a cover and when the risk occurs, the insurance companies pay the damages.

There are two broad types of insurance:

  • Life insurance

Life insurance offers financial compensation in case of death or disability. Some life insurance policies even offer financial compensation after retirement or a certain period of time. Life insurance, thus, helps you secure your family’s financial security even in your absence. You either make a lump-sum payment while purchasing a life insurance policy or make periodic payments of premium to the insurer.  In exchange, your insurer promises to pay an assured sum to your family in the event of death, disability or at a set time.

  • General Insurance

General insurance offers financial compensation on any loss other than death. It insures everything apart from life. General insurance compensates you for financial loss due to liabilities related to your property, health, travel, etc.


As previously pointed out, Insurance companies probably want to make you feel satisfied with the outcome of your claim. You are the customer after all. And you pay premiums for that- to have insurance, and protect yourself, family, property and even your business.

In this case, most people think that it is automatic to be compensated in the event of a loss owing to the fact that they have an active policy. Well, not always. Sometimes the insurance claims get rejected forcing the insured to bear all the loss all alone.

Insurance companies operate on the policy of pooling together risks in a common pool. This is where many people with a common fear of a risk take up an insurance policy against that risk through paying premiums.

The pooling mechanism is based on the premise that the unfortunate few will be compensated by the fortunate many. And since it is a business and just like any other, it is motivated to make a profit, it takes up what remains as its profit.

With this in mind, therefore, insurance companies denying your insurance claim is of their advantage. You might think that they triumph while paying out as little as possible for each claim filed or not paying at all, … you are right. However, they cannot just decide not to pay without a good reason. It will be an offence. And this is the reason in Kenya we have Insurance regulatory authority (IRA) as an autonomous entity to monitor the behaviour of the insurance companies.

Common reasons for denying insurance claims.

1. Lack of insurable interest.

Once a claim is filed, the first thing the insurers do is to establish the insurable interest of the claimant. A person or an entity (it may be a company, group, organization etc.) has an insurable interest on a property, an event or a person if in case of a loss or damage of the property or death, would incur a financial loss or other hardships.

That is, for you to take an insurance cover on any property or event or a person, you have to prove that in case of the occurrence of peril, you will directly be affected.

Insurance policies are meant to compensate for the loss associated with the damage on the property or death of a person. It is mandatory for a person seeking to insure a property or a person, to have an insurable interest.
However, if you have no insurable interest, you don’t experience a loss that could be compensated.

See examples on our previous article: Insurable interest.

2. Non-disclosure of material facts.

While taking or renewing an insurance policy, you ought to disclose all relevant information. If you did not provide accurate or comprehensive information, your insurer may be able to reject your claim.

For example, you need to disclose all prior insurance claims and also already existing damage. This is more common in motor or home insurance. Your car could have been involved in an accident and sustained some damages (they could be minor) so if you don’t mention that while taking or renewing your policy, in case of another accident and your insurer finds out that your car had prior defects, it can be used against you.

In life insurance, not disclosing existing illness and even your work type (because some jobs are very risky,) can also be used against you.

You can disclose the information when the insurer asks you specific questions or when you find out something you know. This is because the insurer would rely on the information you give to decide whether to accept or deny giving you the policy.

If you failed to notify your insurer of something that happened during the period of cover under the policy, your insurer can only rely on your non-disclosure to refuse or reduce your claim if it can demonstrate that it has been prejudiced by your non-disclosure.

However, your insurer has a duty to clearly inform you of the nature and effect of your duty to disclose. If they have not done this, they cannot rely on your non-disclosure to refuse a claim unless your non-disclosure was fraudulent.

3. Fraud.

To establish if there is any fraud, in Kenya insurance companies appoint insurance investigators to prove that you intended not to deceive the insurer. While dealing with the investigator you should be cooperative and you should provide all relevant details including evidence like giving out photographs and availing witnesses.

Also, you should try to remain calm, take your time to think through questions before answering, ask for a break if you need one, if English is not your first language, request an interpreter or use an alternative language and do not sign anything you are unsure of.

An example of fraud can be, occasioning an accident (in a motor accident) or ‘Stealing’ your own car or property and then filing an insurance claim.

If fraud is established by your insurer then it can reject your insurance claim and void your policy. This means you no longer have insurance cover. In serious cases, the matter may be referred to the police for investigation and you may be charged with a criminal offence.

4. Not Appointing or Updating Nominee Details.

This applies to life insurance. A nominee is the person named by the insured to benefit in case the life insurance policy matures (if the insured dies.)
Most people give their immediate family members as nominees and these may include parents, spouse or children.

The policyholder who does not completely understand the claim process, and fail to appoint or update nominee. If these details are not updated in case of death of parents or spouse, in the maturity of the policy (death of the insured) there is a very high chance of denying it since the appointed nominee is no longer available.

Therefore, it is advisable that the nominee details should be updated as soon as there are changes on the nominee’s details.

5. Inclusion and exclusion clauses.

An insurance contract generally is comprised of three parts:- There will be an insuring clause which will describe the broad type of cover and its scope (this is where whatever the policy covers is explained, inclusion). Then there will be the conditional part which responsibilities are set out and the insured has to comply and finally, there will be exclusions.

Exclusion clauses will identify any specific circumstances, events or types of losses that will absolve the insurer of their obligation to indemnify the insured.

Examples of common exclusion clauses are;

  • Motor vehicle insurance – exclusion when a car is not maintained in a roadworthy condition or driver is intoxicated or he is unlicensed etc.
  • Health insurance – exclusion where pre-existing illnesses known to the insured were not disclosed to the insurer at the time of entering into the policy.
  • Property damage – exclusions for flood and other natural disasters.

A claim arising due to any factor laid down in the exclusion clause (like those above,) is bound to be rejected. Therefore, the insured has to carefully read and understand the scope of his or her policy before committing.

However, it is possible to have certain exclusions removed but this will probably result in paying a higher premium as the insurance company has to undertake more risk.

6. You were partially or wholly at fault for the accident.

Understanding the term of your policy contract with your insurance is very important. Some behaviours might result in voiding your coverage.

For example, driving while drunk or authorizing an unlicensed driver to drive your car and the accident occurs or if you were at fault for something that was in the terms of your insurance policy, the company won’t pay.

Also if you were breaking the law at the time of the accident (like for example, calling or receiving calls while driving), your insurance company can refuse to pay.

Furthermore, in automotive insurance policies, the usage of the vehicle counts. For example, transporting illegal substances like bhang, sneaking aliens into the country, psv use when the cover is otherwise limited to private use etc, is also a contributing factor to why insurers can decide not to pay a claim.

But it’s not all about intentional wrongs. If there are other ways that you could’ve avoided the crash, the insurance company might refuse to pay your claim on that ground.

7. Not notifying your insurance company in time.

You have a responsibility to notify your insurance company immediately after an accident. You can do this through your insurance agent, insurance broker or even directly to your insurer.

It is advised you report within 24 hours if possible or soon immediately you can. Failure to do this, your insurer could claim that it didn’t have the opportunity to investigate the claim while the evidence was still valid.

8. Expired or Invalid policy.

If the current policy expires and fails to renew and during that time accident occurs, the insured will not be compensated. The policy claim is admissible only if the policy is in force and not lapsed or expired due to late or nonpayment of premium.


Now that your insurance claim has been rejected, what next?

Do you feel betrayed or do you just feel that your insurer was unfair to you? Of Course, your policy was valid- because you have been paying your premiums in time. It was entirely not your fault to cause the accident- you were not drunk, you were not wrongfully using your car and you are a licensed driver. And you cooperated with the insurance investigators by giving out all the information required but after all that, still, your claim ended up being rejected.

Is that you?

Then this is called insurance bad faith.
Insurance bad faith is a denial of payment by your insurance company when there’s no legitimate reason to do so. This occurs also when the insurer makes the process so slow and burdensome that you can’t move forward, effectively blocking a payout.

There are two types of bad faith;

  1. First-party bad-faith: This is when the insurance company refuses to pay a claim without a reasonable basis or doesn’t properly investigate the claim in a timely manner.
  2. Third-party bad faith: Your insurance company has a responsibility to act as your “defence” if a claim is made against you.

If you think the insurance company denied your claim on the bases of the reasons that aren’t valid, you should proceed and report the matter to IRA who are mandated with consumer protection.

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