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. So you might wonder what went wrong if your claim is denied. Denials can happen for a number of valid reasons, like if you hit your coverage limit or haven't paid for the type of policy required to cover the damage.

However, you may be able to dispute a denied claim. Learn what a legitimate denial looks like and how you can file a dispute if it isn't.

Common reasons an insurer can deny your claim

Based on the claims adjusters we spoke with, the most common legitimate reasons that insurers deny claims involve your policy limits, the type of coverage you have, whether you broke a law and fraud.

Policy type and 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 already exhausted your coverage limits for the policy term.
  • 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

Every state has rules for driving. You typically need a valid driver's license and some form of financial responsibility to drive legally. You also need to follow transportation laws.

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 to 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 while 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

Most insurance companies have an appeals process. You can write an appeal letter that addresses the reasons your claim was denied and submit it according to the insurer's guidelines.

Help is available if you feel your claim was wrongly denied or if your appeal was also 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 claim 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 up to 400 claims at a time, depending on the size of the company's claims department. They're probably dealing with more claims than they can handle, and they tend to be more pleasant or helpful with understanding consumers.

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

There are processes to guide claims settlements, 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.

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