What to Do If an Auto Insurance Company Denies Coverage

A car accident can bring your life to a screeching halt, adding a whole host of extra stress and responsibility. In an ideal world, you’d make a claim, have your personal and property costs covered, and then get back on track. But what happens if your claim is denied? 

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There are many reasons your car insurance claim can be denied, but fortunately, there are also a few things you can do to turn the tables. In this guide, we’ll look at all of them.

Reasons Your Claim was Denied

Your car insurance claim can be denied for a number of reasons, including:

1. You Don’t Have the Cover you Thought You Had

Car insurance policies are complicated and if you’re a new driver, there’s a good chance you don’t understand your policy and the details of it.

Young drivers may assume they have full coverage just because they’re paying several thousand dollars a year, when in fact those costs are likely the result of their age and inexperience. Furthermore, full coverage doesn’t mean you have every possible coverage option.

It could also be the result of a misunderstanding with collision coverage and comprehensive coverage. In some cases, drivers may assume that the former provides the cover only offered by the latter, which is an easy mistake to make. 

In other cases, the issues are a little less obvious. For instance, if you’re driving along a country road and hit a deer or moose, doing serious damage to your vehicle, you may expect to be covered by collision coverage.

But that’s not the case.

You’ll only be covered if you swerve and hit a wall or tree. To get cover from actually hitting an animal, you will need to have comprehensive coverage.

2. The At-Fault Driver Hasn’t Paid Their Premiums

The driver’s insurance pays for your bodily injuries and property damage in the event they cause an accident. But if they missed any of their monthly payments, their policies may have been canceled.

This can happen without the driver’s knowledge, so they may inform you that everything is okay and willingly exchange details with you, only for you to later be refused a claim.

3. You Were Driving Under the Influence (DUI)

If you were found to be using alcohol or drugs at the time of the accident, your claim might be refused. It’s another reason, if you needed one, to avoid drinking before you drive.

4. You’re Not Named on the Policy

If you are not named on the car insurance policy, then you won’t be covered and the same applies to the driver responsible for the crash. It’s important to make sure that all legal drivers in your household are insured to drive your vehicle, otherwise, their claims may be denied following an auto accident.

5. You Didn’t File a Report on Time

A car accident claim must be made within a specific time, the exact details of which will depend on your car insurance company and your policy. The adjuster needs time to investigate, and if you leave it too late, they may not have the time they need and could reject the claim. 

6. You Didn’t Report Big Changes

It’s important to tell your insurance agent or insurance company as soon as you make big changes to your vehicle. If, for instance, you make changes that result in your vehicle being worth considerably more and then have an accident, you’ll be covered for the original cost of your car and not the new cost.

Every time you make big changes like this or buy a new car, tell your insurance company about it.

7. The Claim is Higher Than the Policy Limits 

All auto insurance policies have ceiling limits. These limits may be as little as 25/50/25, which means they have $25,000 in property damage liability, $25,000 in bodily damage per person and $50,000 per accident.

These limits can be increased, but only at the expense of much higher insurance premiums.

8. You Filed Incorrectly

One of the most common ways you can make an incorrect filing is to claim that the other driver was an uninsured motorist, only for them to have insurance. If you do this, your claim will be denied.

If you file a fraudulent claim and they have reason to believe that such a claim was made, it will also be rejected, and a police report may be filed. Defrauding an insurance company in this manner is a felony.

9. You Live in a No-Fault Insurance State

You cannot file a personal injury claim against the other driver if you live in a no-fault insurance state. There are twelve such states in the US:

  • Kansas
  • Kentucky
  • Massachusetts
  • Florida
  • North Dakota
  • Pennsylvania
  • Hawaii
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • Utah

10. The Claim is Disputed

A denied claim could be the result of a disputed liability. The insurance company may not agree with the damages that you are claiming for and may choose to investigate things further.

Alternatively, they may dispute who caused the accident and, as a result, who is responsible for paying the damages.

11. You Sought Medical Attention too Late

If you’re filing for an injury claim following an accident, it’s important to seek immediate medical attention.

Waiting several weeks before getting checked over could lead to a claim being rejected. Those hospital fees will only be covered if they can be traced directly to the accident, which means they need to occur soon after that accident has taken place.

What to Do If Your Claim Was Denied

If your claim was denied, the first step is to understand why.

Ask the insurance adjuster for more details on the rejection. They should tell you why they rejected the auto insurance claim, which can help you in a couple of ways.

Firstly, insurers are required to act on good faith and if the claim was rejected out of bad faith, you can file a lawsuit against them. Most importantly, it lets you know where you stand and how to proceed:

  • If you believe a mistake has been made, contact the insurance company and provide proof.
  • If you reside in a no-fault state, you can’t sue the driver, but you can get money from your own insurance company.
  • If a claim is denied because of policy limits, request that the state be changed to “tendering policy limits”, which will ensure you get cover to the maximum that their policy will allow.
  • Prove the value of your car where possible. You can’t claim for a $50,000 car if all signs point to it being worth much less and you don’t have any receipts to prove otherwise.

Bottom Line: Get Help

Policyholders struggling with claim denial should seek professional help. An accident attorney can help you with this issue and ensure you get everything that you are owed, covering everything from property damage and medical bills, to any other funds lost through missed work, childcare, emotional damages, and more.

The good news is that while denied claims are not uncommon, the reasons for the denial are often minor and it’s not the end of the road.