Denial, Disclaimer, and Declination of Coverage


Summary

This practice note discusses coverage denials by insurance companies as well as disclaimers and declinations of coverage. The distinction between a denial and a disclaimer is timing (i.e., when the determination is made during the claims process) and for what reasons coverage is denied. When an insurer denies coverage, it determines that the facts or nature of the claim never came within the scope of coverage. If an insurer disclaims coverage, it asserts that the claim is within the ambit of coverage, but that some factor, such as late notice, disqualifies it from coverage. Declination of coverage refers to an insurer's refusal to issue a policy upon receipt of a nonbinding application or can also be a refusal by an agent or a broker to transmit an application for insurance to an insurer.