What must an insurer provide to an insured when a claim for benefits is denied?

An insurer is required to provide a written explanation when a claim for benefits is denied. This written documentation is crucial as it serves multiple purposes: it informs the insured of the specific reasons for the denial, allows the insured to understand the decision-making process, and provides a record that can be referenced in the future. It's essential for transparency and ensuring that the insured has a clear understanding of the insurance policy's terms and conditions, as well as the grounds for the denial. By having this written explanation, the insured can better assess their options, including any potential disputes or appeals they might wish to pursue in regard to the denial.

In the context of the other choices, verbal communication does not provide the same level of clarity and permanence that a written explanation does. A refund of premiums is not typically associated with a claim denial; it’s more relevant in situations where a policy is canceled. An option to appeal, while important, would usually follow after the insured has received a detailed, written explanation of the denial, as they need to understand the reasoning first to effectively argue against it.