Purpose
A partial denial letter communicates that the carrier is paying part of the claim but denying coverage for specific items, amounts, or categories of loss. This is one of the most common — and most frequently litigated — pieces of claims correspondence, because it must simultaneously explain what is being paid, what is being denied, and why.
When to Send
A partial denial should be issued after the investigation has been completed for the denied portion. If undisputed amounts can be paid sooner, many jurisdictions require prompt payment of the undisputed portion while the disputed portion remains under review.
Required Components
What Is Being Paid
Identify the specific items, coverages, or amounts that the carrier is paying. Include the payment amount, the coverage under which it is being paid, and any applicable deductible or depreciation.
What Is Being Denied
Identify each specific item, coverage, or amount that is being denied. Do not use generic language — each denied item should be addressed individually.
Factual Basis
For each denied item, explain the factual basis for the denial. What did the investigation reveal that supports the coverage determination?
Policy Provisions
For each denied item, cite the specific policy provision, exclusion, condition, or limitation that applies. Explain how it applies to the facts.
Undisputed Payment
State clearly that the carrier is issuing payment for the undisputed amounts and that the partial denial does not affect the insured's rights regarding the denied portion.
Appeal Rights
Provide full appeal rights, including:
- Internal reconsideration process
- State Department of Insurance complaint process
- Appraisal or arbitration provisions (if applicable)
- Right to consult with an attorney
California Smoke Claims
Use the California smoke-damage guidance before applying smoke exclusions or issuing a partial denial. Bulletin 2025-7 calls for an appropriate investigation of the facts and policy; professional testing, when warranted, is arranged and paid for by the insurer. For claims governed by the 2027 framework, distinguish the rebuttable wildfire-causation presumption from the coverage determination and preserve the separate undisputed-payment triggers.
Apply §2695.7(b)–(c) decision and additional-time notice requirements from proof of claim, subject to the exceptions in the California deadline guidance. A first-party partial denial must explain all known factual and legal bases, the application of cited policy provisions or law, and the CDI review right with the reviewing unit's address and telephone number.
Jurisdiction Notes
Virginia
An estimate of $3,000 or more that is reduced triggers §38.2-510(D)’s explanation, itemized change, attribution, and version-retention requirements. The threshold is the estimate value, not the reduction. See reduced loss estimates.
Adjuster Guidance
- Pay the undisputed portion promptly — do not hold it pending resolution of the disputed items
- Treat each denied item separately with its own factual and policy basis
- Explain depreciation methodology clearly for ACV payments
- If the denial is based on a coverage exclusion, make sure the ROR previously identified that exclusion
- Keep the tone professional and empathetic — the insured may feel that the partial payment is inadequate
