Insurance Claim Denials & Underpayment

A denial letter or a low offer is the insurer’s position, not the final word. As an insurance claim denial lawyer for Illinois businesses and property owners, Allison Cho Law challenges denied claims, underpaid claims, restrictive policy readings, and insurer bad faith in Chicago and across the North Shore.

Insurers deny claims for a handful of reasons: the loss falls outside the insuring agreement, an exclusion applies, a condition such as notice or cooperation was not met, or the claim is worth less than the policyholder says. Each reason carries its own burden. The policyholder must show the loss falls within the coverage grant. The insurer must prove that an exclusion applies, and Illinois courts read exclusions narrowly and resolve ambiguous terms in favor of the insured. Knowing how insurers build a denial is usually the first step in taking one apart.

Underpaid insurance claims are usually about the estimate, not the policy. Omitted scope, depreciation applied to labor, overhead and profit left out, or replacement cost withheld until repairs are finished can each account for much of the gap. Many property policies include an appraisal process for valuation disputes, which can settle the amount of a loss faster than litigation but cannot decide whether the loss is covered.

Timing matters. Most property policies require suit within a set period after the loss, though Illinois law tolls that period from the date proof of loss is filed until the insurer denies the claim in whole or in part. When an insurer’s delay or denial is vexatious and unreasonable, Section 155 of the Illinois Insurance Code allows a court to award attorney fees and costs, plus an additional amount capped at the least of 60 percent of what is owed, $60,000, or the difference between the award and the insurer’s last offer. Illinois does not recognize a separate bad faith tort for most first-party claims, so Section 155 is usually the remedy for insurer bad faith.

If you have received a denial, a reservation of rights letter, or a payment that does not cover the loss, schedule a consultation before cashing a check marked final, signing a release, or letting the suit deadline approach.