We buy auto insurance hoping that we never have to use it, but accidents happen: fender benders, weather damage, and even crashes that lead to injury. And if you have to file a claim, you expect to only pay your deductible and have your policy take care of the rest.
When you’re dealing with property damage and/or an injury, the last thing you want to hear is that your car insurance claim was denied.
So why did your claim get denied, and what can you do about it? Let’s dig in.
Common reasons for a claim to be denied
Having your claim denied is frustrating and can leave you confused as to what you did wrong. But more often than not, insurance companies have legitimate reasons for denying claims.
Here are some of the more common reasons why insurers deny claims.
Exhausting policy limits
When you purchase car insurance, you choose the coverage you want and the limits to the policy. Your claim will be denied if it exceeds your coverage limits or if you’ve already exhausted your policy limits.
For example, if you have a $50,000 limit for bodily injury liability and you cause an accident that costs $100,000 in medical expenses for the other driver, your insurance company will not cover that extra $50,000.
The type of coverage you choose for your policy will also determine the types of damages your insurer will pay for. Your claim will be denied if you are filing for a coverage you didn’t purchase.
For example, if you decided to drop collision insurance for your older vehicle and you get into an accident, your insurer will not pay for the cost of repairs.
Violating the law
If you have the right coverage, your insurance company can still deny your claim if you are found in violation of the law when the accident happened.
An example of that would be driving without a valid license or if you were texting while driving.
Violating insurance policy
If you misrepresent information while you purchased your insurance, this could be cause for your claim to be denied.
If you said you were using your car for commuting to work and then got into an accident while using the car to drive for Uber or Lyft, there’s a possibility your claim will be denied.
Take stock of appearances
Perception is an important aspect of claim approval.
The amount of money an insurer must pay to investigate and cover claims—also known as loss cost—increased 13 percent between 2014 and 2016, more than 10 times the rate of inflation.
With that in mind, a claim that seems false or frivolous could be denied.
“A common claim that is denied is a bodily injury claim,” says Christopher Earley, a car accident attorney based in Boston. “This arises, for example, when you are rear-ended by another vehicle. Even if you are completely not at-fault for this accident, the insurance company may still deny your claim for pain and suffering.”
There are a few best practices you can do to file a claim based on facts rather than optics:
Report the accident to your insurer immediately
A reporting delay could paint the claim as unnecessary and raise the question of when the property damage occurred.
Take photos of the accident and send them to your insurer as soon as possible. Many companies allow their customers to use a phone app or online submission form to make the process easier.
Seek medical attention
Do this after an accident to ensure that your injuries are associated with the accident.
Even minor collisions might warrant a doctor’s visit if it means providing information to support your claim later, which Earley warns could still be denied “[if] the impact between the cars was not very strong, and thus the insurance company does not believe you were really injured from the crash.”
Exchange insurance information
Make sure you do this with any other drivers involved in case a dispute with one of them affects your claim later on.
File a police report
This is important for documenting the details of the accident, especially concerning your fault status and ability to operate the vehicle.
If you were at fault, your claim could be denied if your insurer suspects that you were behaving illegally, i.e.being reckless, talking on a cell phone, etc. Removing these possibilities from the equation is easier if an officer documents the events and can corroborate your statement.
Get the names and contact information of the officers and other witnesses who saw the scene.
Review your current policy
You should do this to make sure that all the information you provided is correct. An error or lie on your part could lead to a legitimate claim denial, even if the information has nothing to do with your accident.
Take steps for resolution
If you believe your claim was unfairly denied, there are steps you can take to resolve the issue.
Gather information (and your patience)
Dealing with a claims adjuster can be frustrating if you’re looking down the barrel of medical bills and car damage.
Set yourself up for success by gathering as much information about your accident as possible. Provide the adjuster with copies of your police and medical reports, third-party assessments of the damage (e.g., a mechanic’s report), and other documentation that supports your claim.
Focusing on the facts will help you build a stronger case.
Contact the Department of Insurance
If you’ve exhausted all options with your insurance company, contact your state’s Department of Insurance to submit a formal complaint.
Most state-run departments have the details of the process clearly listed on their website.
For example, Illinois’s Department of Insurance provides downloadable instructions based on the type of insurance complaint you need to file.
Before using this resource, ask your insurer to provide a letter explaining why your claim was denied to help the department work with you to address the issues.
Hire an attorney
The Department of Insurance should be able to help you manage your dispute.
But depending on the size of your claim, including property damage and any injuries you suffered, a lawyer may be able to move things along more quickly and remove some of the burden from your shoulders.
If you’re shopping around for insurance or are thinking of switching insurance companies, ask about their claims process. Each company is different and this could be important to you if you need to file a claim again in the future.