Having an insurance claim denied is frustrating, especially when you have been paying premiums for years specifically for this kind of protection. But a denial is not always final. Many denied claims are overturned on appeal when policyholders provide additional evidence, challenge the insurer’s interpretation of policy language, or escalate through the proper channels.
Here is why claims get denied, how to appeal step by step, and where to go if your insurer will not budge.
Common reasons insurance claims are denied
| Reason | What It Means | Example |
|---|---|---|
| Policy exclusion | The cause of loss is specifically excluded in your policy wording | Water damage from gradual seepage is excluded (sudden burst pipe is covered) |
| Late reporting | You did not report the claim within the required time frame | Auto accident reported 6 months later; insurer argues inability to investigate |
| Misrepresentation | You provided inaccurate information on your application | Failed to disclose a previous claim or criminal conviction |
| Failure to mitigate | You did not take reasonable steps to prevent further damage | Did not turn off water after a pipe burst, causing additional damage |
| Coverage gap | The type of loss is simply not covered by your policy | Earthquake damage without earthquake endorsement |
| Pre-existing condition | Health/disability claim for a condition that existed before coverage began | Disability claim for back pain that was treated before the policy start date |
| Material change not reported | You did not inform the insurer of changes that affect risk | Started a home business or got a new dog breed without updating your home policy |
| Deductible not met | The claim amount is below your deductible | $1,500 claim with a $2,000 deductible |
The denial letter from your insurer must cite the specific policy clause supporting the denial. If it does not, request it in writing — this is your right as a policyholder.
Step-by-step appeal process
Step 1: Read the denial letter carefully
The denial letter should specify the exact policy clause or condition the insurer is relying on. Read the corresponding section of your policy. If the wording is ambiguous, that ambiguity generally favours the policyholder under Canadian insurance law (the contra proferentem principle — ambiguous contract language is interpreted against the party that drafted it).
Step 2: Gather supporting documentation
Build your case before contacting the insurer:
| Claim Type | Useful Documentation |
|---|---|
| Home insurance | Photos/video of damage (before and after), contractor estimates, maintenance records, receipts for temporary repairs |
| Auto insurance | Police report, dashcam footage, witness statements, independent damage appraisal, medical records |
| Life insurance | Medical records, physician’s letters, autopsy report (if applicable), proof of policy being in force |
| Health/disability | Specialist medical opinions, functional capacity evaluation, employment records showing inability to work |
| Travel insurance | Medical facility records, proof of expenses, trip booking confirmation, reason for claim |
Step 3: Request internal review
Contact your insurer and formally request a review of the denial. Ask to speak with a supervisor or a different claims adjuster. Present your additional documentation and explain why you believe the denial is incorrect.
Tip: Put your appeal in writing (email or registered letter). This creates a paper trail and ensures your arguments are clearly documented.
Step 4: Escalate to the insurer’s ombuds office
Every insurance company in Canada is required to have an internal complaint-handling process. If the adjuster and their supervisor uphold the denial, ask to escalate to the company’s ombuds office or complaints department. This is a separate team that reviews complaints independently from the claims department.
Expected timeline: Most insurers respond to internal complaints within 30 to 90 days.
Step 5: Escalate to the external ombudsman
If the internal process fails, escalate to the appropriate external ombudsman service. These services are free, independent, and can facilitate a resolution.
| Insurance Type | External Ombudsman | Website |
|---|---|---|
| Property & auto insurance | General Insurance OmbudService (GIO) | giocanada.org |
| Life, health & disability | OmbudService for Life & Health Insurance (OLHI) | olhi.ca |
| Quebec (all types) | Autorité des marchés financiers (AMF) | lautorite.qc.ca |
The ombudsman will review your case, the policy wording, and the insurer’s reasons for denial. They can make non-binding recommendations to the insurer. While the recommendations are not legally enforceable, insurers take them seriously — most claims reviewed by the ombudsman result in some form of resolution.
Step 6: Legal action (last resort)
If the ombudsman process does not resolve the issue and you believe the denial is wrongful, you can pursue legal action. Options include:
- Small claims court — for claims under the provincial limit ($35,000 in Ontario, $35,000 in BC, $50,000 in Alberta). No lawyer required.
- Civil litigation — for larger claims. Insurance law firms often work on contingency (no upfront fee; they take a percentage of the settlement if you win).
- Class action — if many policyholders are affected by the same denial pattern.
Limitation periods for legal action by province
| Province | Limitation Period | Notes |
|---|---|---|
| Ontario | 2 years from denial | Some policies specify 1 year — check your contract |
| British Columbia | 2 years from denial | |
| Alberta | 1 year (or as specified in the Insurance Act) | Shorter than most provinces — act fast |
| Quebec | 3 years | |
| Manitoba | 2 years | |
| Saskatchewan | 2 years | |
| Nova Scotia | 2 years | |
| New Brunswick | 2 years | |
| PEI | 6 years (general limitation) | |
| Newfoundland | 2 years |
Important: Some insurance policies include a shorter contractual limitation period than the provincial default. Check your policy for a “limitation of action” or “time limit for legal proceedings” clause.
When denial might be bad faith
Insurance companies in Canada have a duty of good faith — they must handle claims fairly, promptly, and without unreasonable denial. If you believe your insurer is acting in bad faith, examples include:
- Denying a claim without proper investigation
- Unreasonably delaying the claims process
- Misrepresenting policy terms to justify a denial
- Refusing to provide a written explanation
- Offering a settlement far below the reasonable value of the claim
Bad faith claims can result in additional damages being awarded beyond the original claim amount. If you suspect bad faith, consult an insurance litigation lawyer.
Tips to prevent claim denial
- Read your policy. Understand what is covered and what is excluded before you need to make a claim.
- Report claims immediately. Notify your insurer as soon as possible — even before you know the full extent of the damage.
- Document everything. Take photos, keep receipts, and maintain records of all communications with your insurer.
- Mitigate damage. Take reasonable steps to prevent further loss (board up a broken window, turn off water, etc.). Your insurer will reimburse reasonable mitigation costs.
- Be honest on your application. Disclose all relevant information. Misrepresentation is one of the most common (and hardest to overturn) grounds for denial.
- Report material changes. Notify your insurer of renovations, new pets, home businesses, or other changes that affect your risk profile.
Related pages
- Car Insurance Guide Canada — coverage types and how to choose
- Best Home Insurance Canada — comparing providers
- Best Critical Illness Insurance — protect against health-related financial loss
- Do I Need Umbrella Insurance? — extra liability protection
- Insurance Guide Canada — overview of all insurance types