Do Insurance Companies Deny Major Fire Loss Claims?

In the aftermath of a major fire loss, whether it involves your family home or your business, emotions are raw, recovery feels like a monumental task, and your insurance policy is supposed to provide a safety net. But what happens when that net doesn’t hold?

In the 2023 Annual Statement on Market Conduct Public Report from the Canadian Council of Insurance Regulators, claim denials are calculated using a claims rejection ratio (Claims rejection ratio = # claims denied in the period / (# of claims opened at the beginning of the period + # of new claims opened during the period – # of claims opened at the end of the period). Straightforward, right? For most people, that’s anything but. 

According to this calculation, 14.4% of personal property insurance claims were denied in 2023. That’s nearly one in seven claims. So, let’s get to the heart of it. Why do insurance companies deny major fire loss claims? What can you do to protect yourself? And if the worst happens—if your claim is denied—how do you fight back?

 

Why Do Insurance Companies Deny Major Fire Loss Claims?

Let’s be clear. Insurance companies don’t deny claims for fun. While many denials are justified, some stem from reasons that feel arbitrary—or worse, unfair.

1. Insurance Coverage Exclusions and Limitations 

You’d think your homeowner’s policy would cover all your property damage. It doesn’t.

Most policies come with exclusions and limitations. Fires caused by faulty wiring might not be covered if the electrical issues were pre-existing. Damage to vacant properties? Likely excluded. And what about water damage from the fire department’s hoses? Your policy might only cover part of it.

These exclusions are often buried in legal jargon, so you may not even know they exist until it’s too late.

 

2. Missing Documentation

Proof is everything in the insurance claims process. Without it, your claim might not stand a chance.

Were you keeping an inventory of your personal items? Do you have receipts? Photos? Videos? Fire department reports? If the answer is no, your insurer might argue there isn’t enough evidence to process your claim.

 

3. Misrepresentation or Failure to Disclose

Insurers expect you to be upfront about your property’s condition and any risks when you apply for coverage. If they think you withheld information—say, about previous claims or your  or your non-residential use of the property—they might claim your policy is void. Even innocent oversights can be used against you.  Failing to disclose that you are renting your property or using your property for a business could be excluded under the terms of your policy if the insurance company is not aware before the fire or loss occurs. 

 

4. Allegations of Fraud

Sometimes, insurers push back by questioning the fire’s cause. Was it accidental, or was it perhaps  intentional? These investigations can delay claims and lead to outright denials.

 

The Insurance Claims Process: What You Need to Know

Filing a fire insurance claim isn’t just paperwork. It’s a negotiation. A chess match. A process where every move matters.

Here’s how it typically unfolds:

1. Notify Your Insurer

The first step seems simple: report the fire. But timing is critical. The sooner you notify your insurance company, the sooner the claims process begins.

 

2. Document Everything

Grab your phone. Take photos. Record videos. Make a list of personal items lost in the fire. Every detail matters, from the singed curtains to the smoke-damaged heirlooms. Things can go missing if you aren’t able to continue living at the property.

 

3. Work with the Adjuster

An insurance adjuster will assess the fire damage. But remember, they don’t work for you—they work for the insurance company and they don’t have to do anything for you other than investigate and evaluate the claims that you would like to make under the policySometimes the role of your insurance adjuster can become blurry because they may approve emergency repair work and give you an early settlement advance. 

 

4. File Your Claim

Submit all required documentation: proof of ownership, repair estimates, fire department reports. A complete claim is harder to deny.

 

5. Negotiate

The first settlement offer might not reflect the true cost of repair and replacement. Push back. Negotiate for the full value of your loss.  Insurance companies sometimes try to rely on rebuilding and repair estimates from unqualified contractors and will try to insist upon the lowest quotation for the repairs.

 

How to Prevent Fire Claim Denials

You can’t control everything. But you can take steps to strengthen your claim and reduce the likelihood of a denial.

1. Understand Your Policy

Policies aren’t light reading, but they’re essential. Take the time to understand your coverage, exclusions, and limits before disaster strikes.

 

2. Keep Detailed Records

Create an inventory of your personal items. Save receipts. Update photos and videos of your property regularly. This proactive step can make all the difference.

 

3. Act Quickly

Filing your claim promptly is critical. Missed deadlines can lead to unnecessary complications—or outright denials.

 

4. Get Legal Help Early

An insurance lawyer can help you navigate the claims process from the start. They’ll ensure your claim is rock-solid and advocate for fair compensation if disputes arise.

 

How McNally Gervan Can Assist

At McNally Gervan, we’ve seen the emotional and financial toll fire damage takes on homeowners. That’s why we’re here—to make the claims process smoother and to fight back when insurers refuse to do what’s right.

Here’s how we can help:

• Policy Review: We’ll break down your homeowner’s policy, so you know exactly what’s covered—and what isn’t.
• Claims Assistance: From filing your claim to negotiating with the insurance adjuster, we handle the details while you focus on recovery.
• Challenging Denials: If your claim has been denied, we’ll build a case to challenge the insurer’s decision and secure the compensation you deserve.

 

Final Thoughts

Here’s the hard truth: insurance companies deny claims. Even major fire loss claims. But a denial from your insurance provider doesn’t have to be the final word.

At McNally Gervan, we help homeowners navigate the insurance claims process, from filing a major claim to challenging denials. We understand what’s at stake, and we’re here to ensure your voice is heard. Visit our fire claims page to learn more.

We can also help with accident benefit claims, as trusted Ottawa personal injury lawyers, we’re committed to protecting your rights and helping you move forward with confidence.

If you’re ready to take the next step, contact us today. Let’s work together to secure the compensation you deserve.