How to Improve the Format of Policy Language in Denial Letters

One of the most cumbersome aspects of a denial letter is the often-abrupt transition from letter to legalistic policy language to establish what the policy says regarding a particular type of incident. Claims people refer claimants to the policy in order to demonstrate that a particular type of loss is not covered in the policy.

Just quoting the policy, however, is not as simple as it sounds. Problems occur when the quoted policy, which is filled with legalese, is transposed to the letter with poor formatting or when the denial writer neither prepares the reader for the policy nor summarizes its key point but just refers him or her to it as though it was self-explanatory.

Here are six tips on making policy language more readable. They are drawn from hundreds of denial letters I have seen while teaching my one-day on-site Effective Writing for Claims Professionals seminar at insurance companies and claims associations across North America:

The following letter is a good example of how NOT to quote policy language in a letter. The writer may not be able to change the policy language but can at least lead into the policy more smoothly, paraphrasing the legalistic sentences the reader is about to read:

**

February 25, 2017

Date of Loss: January 20, 2017
Claims Number: 3490
Policy Number 143739
Insured: Rick Mooney
Jill Mooney

Mr. and Mrs. Mooney:

This letter is regarding your claim for fire damage sustained to a 2017 feed wagon, owned by Marshall Farm Supply, Inc., occurring on January 20, 2017.

There is no coverage for this loss within your XXX Personal Liability Coverage
Policy form 400-1(08-08) as follows:

Page 12 and 13 of 20 exclusions
F. Coverage L – Liability

Coverage does not apply to:

“Property damage” to property rented to, occupied or used by or in the care of an “insured,” except for the “property damage” to the “insured locations” that is caused by fire, smoke, or explosion;

Page 14 of 20 Additional Coverages
C. Coverage N – Damage to the Property of Others
2. We will not pay for property damage
c. Arising out of:

(1) Professional services, a “business” or “farming” operation engaged in by an “insured”

Additionally, there is no coverage under your policy for

Page 15 of 20 “Optional Coverages”
A, Coverage D-Damage to Farm Equipment of Others.

We regret that we are unable to make payment for this claim based on the policy provisions. We hope this letter explains our position. If you have any questions after reviewing this letter you may reach me at 666-6666 or e-mail bbbb@gasil.com.

Thank you.

**

While the writer tries to use boldface to make the policy read better, it doesn’t help. What would help would be a sentence leading into the policy language that says: “There is no coverage for your feed wagon according to the following three sections of your policy.”

With more and more judges insisting that insurance letters sound less boilerplate and more original, claims professionals need to rethink the formatting, phrasing and organization of their denial letters or insurance companies may find themselves denied the verdicts they seek when squaring off against a claimant in a court of law.