Coverage Dispute — Insurance Claims Definition
General
A disagreement over whether the policy applies to a particular loss or claim.
Coverage disputes involve policy language, facts of loss, exclusions, endorsements, and application representations. They may be resolved by negotiation, appraisal (amount only), mediation, arbitration, or declaratory judgment actions.
Reservation of rights and coverage counsel letters are common precursors.
Examples
Insurer denies mold damage as resulting from long-term seepage excluded as wear and tear; insured argues sudden pipe break was the proximate cause.
Common Mistakes
Insureds conflate disputes over amount with disputes over coverage. Failing to preserve evidence needed to prove covered cause loses the coverage argument.
