Auto Insurance Claim Denials

Auto Insurance Claim Denials

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When you pay for auto insurance coverage, you expect to get a payout if you need to file a claim. But you might wonder what went wrong if your claim is denied. This may happen for a valid reason — but you may successfully dispute a claim denial in some cases. Below, we explain what a legitimate denial looks like and how you can get help filing a dispute.

Common reasons an insurer can deny your claim

After a car accident or incident, you want to know your insurer will be supportive during the claims process. But it can be confusing and frustrating when your insurer refuses to pay for a claim. Based on the claims adjusters we spoke with, these are the most common legitimate reasons that insurers deny claims:

Policy limits

When you purchase auto insurance, you must select the type and extent of coverage you want to buy. Generally, having higher coverage limits will help you get the payout you need following a covered incident. The type of coverage you select will also determine whether the insurer will cover the claim. But there's nothing an insurance company can do once your claim exceeds your coverage limits or if you simply don't have coverage.

For example, if you don't have collision coverage, then your insurer won't pay for the cost of repairs to your own car after an accident. Your claim could be denied because:
  • Your claim exceeds your coverage limits.
  • You have exhausted your coverage limits.
  • You are filing a claim for coverage that you did not purchase, such as a claim for repairs when you do not have collision or comprehensive coverage.

Violation of state law

In most states, you need a valid driver's license and some form of financial responsibility to drive legally. An auto insurer can deny your claim if your incident happens while you were driving illegally or breaking the law.

The insurance provider's claims department may deny your claim for these reasons:
  • You were driving while intoxicated or driving under the influence at the time of the accident.
  • The insurer believes the accident was avoidable.
  • You were driving without a valid license.
  • You were driving without valid auto insurance.

Miscellaneous reasons

Insurers may also deny your claim based on circumstantial evidence or doubt surrounding an incident. That's why it's important to gather as much information as you can and give it to your insurer or third-party insurer.

The insurer handling the claim may have doubts about the legitimacy of your claim if:
  • You did not report the accident immediately to the police or your insurer.
  • You did not seek medical attention immediately after the accident, leading your insurer to suspect you're filing a claim for injuries that were not caused by the accident.
  • You misrepresented information when getting your quote, and the insurer found out about it in the course of investigating your claim.
  • Your insurance company is actually not licensed in the state, and the insurance agent you have been working with is a fraud.

Solving a claims dispute

Help is available if you feel your claim was wrongly denied. First check whether your state's department of insurance has a special unit to deal with consumer insurance complaints.

If you're unable to get help through your state, consider speaking to an attorney about resolving a claims dispute.

Advice from claims adjusters

The claims adjusters we spoke with suggested first filing a claim with your own insurer if possible. Third-party claims — ones that are filed with the other driver's insurer — are more commonly delayed or denied.

You should also try to be friendly and cooperative when dealing with a claims adjuster. One adjuster may be juggling anywhere from 100 to 400 claims at a time, depending on the size of the company's claims department. And they might only see these claims once a month. Basically, they're probably dealing with more claims than they can handle, and they tend to be more pleasant or helpful with understanding consumers who are easy to work with.

If you want to make the claims process even faster, then gather as much information as you can — especially if you're asking for a large amount. For example, you can gather your car insurance account information, driver's license, a statement of what happened, and photos of the scene of the accident and damaged cars. This can speed up the process because it cuts down on the communication involved.

There are processes in place to guide the claims settlement process, and some may depend on the insurer. For example, larger claims might have to go through a manager's approval before getting settled. To make sure you get a fair payout, learn the rules, stay positive and provide as much information as you can.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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