The insurance company refused to pay or reduced the payout: what to do

A wrecked car. A broken leg from skiing in the Alps. A neighbor’s flooded apartment. A person has been paying premiums for years, but when disaster strikes, they receive a brief letter: “Unfortunately, insurance coverage does not apply in your case.” Or an even more frustrating scenario—instead of the expected 6,000 euros, only 2,100 is transferred.

The feeling is simple: you’ve been cheated. And this is where many people make their first mistake—they give up, because it seems hopeless to take on a big company.

In reality, things are different. The insurer’s denial is not a final verdict. There is a fairly clear three-step process, and at least one of these steps costs nothing—no lawyer and no courtroom required.

Why an insurer might refuse to pay at all

Not every refusal is unlawful. Before getting angry, it’s worth understanding the grounds on which the insurer is refusing to pay—this directly determines whether you have a realistic chance of changing anything.

The most common reasons:

• The incident isn’t covered by the insurance policy. For example, if a comprehensive auto insurance policy specifies a deductible of 300 euros, but the damage amounts to only 250 euros, then no payout will be made at all.
• Violation of the rules. Driving under the influence, leaving the house unattended for longer than permitted, or failing to activate the alarm system.
• Failure to report in a timely manner. Most policies require that an incident be reported within 1–3 business days.
• Incorrect information provided when taking out the policy. A pre-existing medical condition was not disclosed in health or life insurance, or the actual driver of the vehicle was not listed.
• Dispute over the amount of damages. The insurer agrees to pay but has assessed the loss at a lower amount—this results in a reduced insurance payout.

The bottom line is this: Some denials are legitimate, but a significant portion of them are based on a disputable interpretation of the rules or a hasty assessment of the damage. It is precisely these latter cases that are worth contesting.

The most important fact that no one mentions: the burden of proof

Many people think they have to prove that they deserve the payout. In many cases, the opposite is true.

When an insurer claims that an exclusion applies or that you have violated the terms of the contract, it is the insurer who must substantiate this. The insurance company is a professional market participant, and it drafted the terms of the contract itself. Therefore, any ambiguities or uncertainties in the contract are interpreted in favor of the consumer.

If the insurer invokes an exclusion or a breach of the terms, it is up to them—not you—to prove it. Ambiguous wording in the policy is interpreted in the consumer’s favor.

In practice, this means the following. If you receive a response stating “coverage does not apply,” you can ask: “Which specific clause of the policy is being cited, and what evidence supports this?” Often, the insurer’s position begins to shift after such a question is asked.

Step by step: what to do in practice

1. Request a written decision with reasons

A verbal “we won’t pay” means nothing. Demand an official written decision stating:

• the specific reason for the denial or reduction,
• the rule or contract provision on which the decision is based,
• a calculation of the damages (if the payment has been reduced).

Without this document, it’s difficult to proceed. It serves as the basis for your entire defense moving forward.

2. Gather evidence

Photos, receipts, repair estimates, medical records, witness contact information, and correspondence. If there is a dispute over the amount of damages, the opinion of an independent property appraiser or auto repair shop may be decisive.

In the case of a flooded home, dated photos and a report from a neighbor or emergency services will be very helpful.

3. File a claim with the insurer

A claim to the insurer is an official letter in which you state your disagreement and request a review of the decision. Write in a businesslike manner, without emotion.

What to include:

• the policy number and claim file number,
• a description of the incident,
• the insurer’s decision with which you disagree,
• arguments (explaining why the denial or reduced insurance payout is unjustified),
• a specific claim (to pay the specified amount),
• a list of attached documents.

The insurer is required to review the claim within the timeframe specified by law and regulations—usually within 15–30 days. Send it by certified mail or email with a read receipt so you have proof of submission.

4. Contact the Bank of Lithuania—free of charge

This is the major loophole that almost no one talks about. If the insurer rejects your claim or provides an unconvincing response, you can refer the dispute to the Bank of Lithuania.

The Bank of Lithuania resolves disputes between consumers and financial institutions through an out-of-court process. What you need to know:

• the procedure is free,
• a lawyer is not required—you can file the claim yourself,
• you can file a request once a certain amount of time has passed since you contacted the insurer and they have not satisfied your claim,
• you generally must file within one year of contacting the insurer.

The Bank of Lithuania then reviews the situation and issues a decision or a recommendation. Some decisions are advisory in nature, but insurers take them seriously—this is public information and a matter of reputation.

5. Court—a last resort

If that doesn’t help, the only option left is court. This usually requires a lawyer, and the process takes months. However, most consumer disputes are resolved at earlier stages, so only a minority of cases reach court.

What the process looks like from start to finish

A real-life example. A driver had comprehensive auto insurance and sustained significant damage in a traffic accident. The insurer paid out a lower amount, arguing that some of the parts were worn out. The driver submitted an estimate from an independent repair shop showing the actual repair cost, along with a claim. The insurer added part of the amount. The remaining dispute was referred to the Bank of Lithuania—without any attorney involved.

This doesn’t mean that everyone will get more. But it shows that a reduced insurance payout isn’t a figure set in stone.

Common Mistakes

People give up too quickly. The first “no” is taken as final. In reality, it’s just the first stage of negotiations.

Writing in an emotional tone. An angry letter full of accusations doesn’t help. Specific points, dates, and documents do.

Failure to preserve evidence. Once you’ve cleaned up the broken property or thrown away damaged items, it becomes nearly impossible to prove the damage later.

Deadlines are missed. Both are important—the deadline for reporting the incident and the deadline for filing a claim with the Bank of Lithuania. If you’re late, your right to dispute the claim may simply disappear.

Failure to read the terms and conditions before purchasing a policy. Many disputes arise simply because the policyholder was unaware of an exclusion or deductible. That is precisely why it’s important to understand exactly what your insurance coverage includes before signing the contract.

When choosing a policy online through comparison platforms, such as Draudykle.lt, you can see not only the price but also the differences in deductibles and coverage among insurers. And a DI consultant explains the exclusions in plain language—this helps you avoid unpleasant surprises even before a claim occurs.

FAQ

Can I file a claim with the Bank of Lithuania on my own, without a lawyer? Yes. Disputes with insurers are handled by the Bank of Lithuania free of charge, and a lawyer is not required. You can fill out and submit the claim form on your own. This is one of the main reasons why you shouldn’t worry about high costs right away.

How long does the insurer have to pay the claim? Specific timeframes depend on the type of insurance and the contract. Generally, the claim must be paid within the time period specified in the policy once all necessary documents have been collected. If the insurer delays payment, this in itself is grounds for a claim.

What should I do if I disagree only with the amount of the payout, not with the denial itself? Gather independent evidence—an appraiser’s report, a repair estimate, and medical bills. A reduced insurance payout is contested in the same manner: file a claim with the insurer, then, if necessary, with the Bank of Lithuania.

Can the insurer refuse to pay due to a minor procedural violation? This is not always lawful. If the violation had no impact on the incident or the amount of damage, the refusal may be disproportionate. In such cases, ambiguities are interpreted in favor of the consumer.

Who pays for the damage assessment if I disagree with the insurer’s estimate? The consumer usually pays for an independent assessment initially. However, if it turns out that the insurer’s assessment was incorrect, these costs can be included in the claim.

A brief conclusion

The insurer’s refusal to pay is not yet a loss. Request a written decision, gather evidence, file a claim, and, if necessary, file a dispute with the Bank of Lithuania free of charge and without a lawyer. And don’t forget: in many cases, it is the insurer who must prove why they are not paying.

And the best defense starts even before a loss occurs—with a clear understanding of exactly what your policy covers.