What happens if a claim is denied without justification?

When a claim is denied without justification, it can result in serious legal implications for the insurer. Insurers have an obligation to handle claims fairly and in good faith. If a claim is denied without a legitimate basis, the insured party may pursue legal action against the insurer for breach of contract or bad faith. This legal action can lead to consequences for the insurer, such as compensatory damages or punitive damages, depending on the jurisdiction and specific circumstances of the case. This obligation to act in good faith is critical in maintaining trust in the insurance process and ensuring that policyholders are treated fairly.

The other choices do not address the legal consequences of unjustified denial adequately and may not reflect standard practices or requirements tied to insurance claims management in such situations.