What indicates a claim will be denied based on actions taken by the policyholder?

A claim is likely to be denied if it arises from involvement in illegal activities, such as carjacking. Insurers typically include exclusions in their policies for claims that result from unlawful actions. This means that if a policyholder engages in illegal conduct, any claims resulting from that conduct can be denied since the policy does not cover illegal activities.

Engaging in illegal actions contradicts the principles of good faith and fair dealing that are foundational to insurance contracts. Insurers expect policyholders to abide by the law, and engaging in activities like carjacking creates an inherent risk that the insurer is not willing to cover. Therefore, claims stemming from such actions are considered outside the scope of coverage.

On the other hand, participation in legal activities, whether it is recreational or related to employment, typically does not lead to automatic denial of a claim unless specific exclusions apply. As such, a claim due to accident from employer negligence, for example, might be reviewed under the worker's compensation framework instead of being outright denied.