What to Do When Your Car Insurance Claim is Denied
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UPDATED: Aug 13, 2020
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A car insurance denial can be costly, frustrating, and disappointing. If your auto insurance claim was denied, take careful note of the reason given in the insurance denial letter. Make sure your car insurance denial is appropriate! Car insurance companies can make mistakes, and you could covered under your policy despite your insurance company saying that you are not.
TIP:Insurance companies save money by denying claims. This does not mean they are dishonest, but it does mean that when in doubt they will deny your car insurance. You do not have to accept a car insurance denial as a final judgment, and the stated reasons for not paying can be challenged. You may find the insurance denial is not supported by the facts of the claim.
Why Your Insurance Claim Was Denied
It is critical that you understand the reason your insurance claim was denied. If you know why your insurance claim was denied, then you can properly determine if you have reason to dispute the decision. There are several reasons company’s deny car insurance claims, and the following are common examples:
- No coverage on your car insurance policy for the claim presented. For example, if you drive an older vehicle, you may carry only liability insurance and have no collision coverage. In this example, your car insurance is denied correctly.
- You made an Uninsured Motorist Claim under your policy and it turns out the other party to the accident was insured.
- You do not qualify as a named insured under the policy. For example, if you are a teenager and you are specifically excluded under your parents’ policy because your parents do not expect you to drive their vehicle.
- Your coverage has lapsed because you failed to pay your premium before the end of the grace period.
- The amount of damage claimed exceeds your policy limits on your declarations page and the insurance company will not cover the excess.
- You bought a new car and failed to notify the insurance company to add it to the policy within the specified time given in the policy.
If you still believe your insurance claim was denied incorrectly after reading the insurance company’s reasons and reviewing your policy, there are some steps you may take to try to appeal a denied insurance claim. You have certain rights under your policy and under state law. Your insurance company has a duty to fairly and promptly negotiate to settle your car accident insurance claim in good faith.
Bad Faith Insurance Claims: How to Dispute a Wrongful Insurance Denial
If the stated reason your car insurance was denied do not reflect the actual facts of your claim, you have a right to dispute the decision. If you elect to dispute the claim denial, consider the following action:
- Write the insurance company to tell them where their mistake is and provide them with documentation to support your response. Ideally they will negotiate with you and give you a fair settlement.
- Appeal the company’s decision to the State Insurance Commissioner.
- You have the option to file suit against the company for bad faith insurance practices, breach of contract, and/or violations of your state’s insurance code. If you decide to pursue this option, you should hire an insurance bad faith attorney to handle the legal process.
If, after you either take or threaten action under an insurance bad faith claim, the insurance company may reopen your claim and move forward with their investigation. If the company holds firm, and you suspect you are being bullied, then you may be able to move forward with a bad faith insurance lawsuit.
TIP:Your insurance company is required to act in good faith when handling your car accident claim. If the insurance company unnecessarily denies your claim or fails to promptly settle it, they could be in violation for acting in bad faith, breach of contract, and violations of your state’s insurance code. Click here to contact an auto accident attorney who is experienced in insurance coverage litigation if you believe your insurance company is not handling your claim fairly.
If your auto accident claim is being handled with the insurance company for the other driver, a failure to settle promptly or fairly is not a denial of the insurance claim. You should think about contacting an attorney to either negotiate a settlement for you or to file suit against the responsible driver.
In the end, when the claim has been resolved you maybe be left with the feeling that you were not given the customer service that you deserve— from either your agent or your insurance company. If you are unhappy with the service you received, look into changing companies and begin shopping for new car insurance. Click here to visit the Free Advice quote center and get a quote on your insurance today!
For more information about auto insurance claims, check out the following articles:
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