You buy a policy to protect yourself against many unknown damages and/or liabilities. Most people don’t even think about possible damages and injuries when they buy automobile insurance. They purchase a policy because it is a sensible thing to do. But one day you may have to ask an insurer to compensate you for the losses you suffered.
Say you decided to claim for the damages to your vehicle or medical expenses for your accident related injuries. You contacted the relevant insurer in time, fill out the forms, sent the police and/or medical reports, estimates and any other documents asked of you and answered all their question. Nevertheless, you find out that your auto insurance claim denied. What to do next?
Common Reasons for Auto Insurance Claim Denials
Before we look at our options after a refusal, we should look at the common reasons for why is an automobile insurance claim denied? Insurers have to explain their decisions and reasons behind it. That letter would be the starting point in any further action you may take.
- Disputed Liability: This is often seen in a liability claim made against third parties’ insurers. Someone else caused the accident that led to your injuries or damages but they or their insurer is now disputing their fault in the accident and liability arising from it. Fault in a collision is one of the most contested areas in vehicle insurance claims. Fault is the first thing an insurer will try to disprove to get out of paying for damages and injuries. Furthermore, third party drivers may have a different recollection of the crash or even choose to lie about it so that they are not responsible for it. That is why it is extremely important to gather as much information as possible following an accident. Try to get police report, take many pictures, and get details of witnesses just in case you need to prove that someone else caused it.
- No Coverage: To be fair, they aren’t going to pay for something that wasn’t covered by your policy. That is why it is key that you buy sufficient coverage for your vehicles.
- Misrepresenting Facts: You need to provide accurate and honest information when you are filling auto insurance quote forms or giving them over the phone. Any deliberate attempt to fool insurers into giving you cheap car insurance quotes can backfire when you have to make a claim. The most common example is to give an address other than your actual residence where the insured cars are mostly kept. This sort of dishonest representations are usually illegal that not only can lead to refused insurance payments but also criminal charges. Policyholders also need to inform their insurers of any material changes in their circumstances like someone new moving into their home.
- Policy Exclusions: There are some common exclusions insurers use to get out of claims. One of them is intentional actions of the policyholder or a family member. They will not pay for damages you (or a family member) knowingly caused to your auto. Furthermore, there may be specific exclusions to your policy that leads to refused settlements. For example, an excluded driver that shouldn’t have been driving your auto might have caused the accident.
- Lapse in Vehicle Insurance: If your policy installment was somehow not paid your policy would have lapsed. Carriers don’t have to inform you of any lapses due to nonpayment. It is up to you to make sure your premium is paid in time and any unfortunately lapses are avoided.
- Failure to Notify your Insurer: One of the most notable failures would be not to inform the company of the losses or incidents in time. Your policy may actually have a cut off point for claims like thirty days. Beyond that insurers can argue that they were not given the chance to investigate the incident or accident in a timely manner.
- Business Use: Business use of a personal auto may not be covered by your personal auto insurance. You need to discuss with your insurer if you ever carry paid or work related passengers or goods in your vehicle and see if you could add business use on your policy. Otherwise, you may need to buy commercial vehicle insurance.
What to Do when a Car Insurance Claim Denied?
After all the work and frustration, you may get a letter informing you of the insurers decision of refusing to pay for your damages or injuries. There may be many reasons for it as discussed above. The carrier may have interpreted the facts wrong or applied a policy condition unfairly. You would hope that it can be resolved pretty quickly and it may be.
Duty to Act in Good Faith
However, it may be that the insurer is acting in bad faith. Some insurers use tactics to intimidate and wear down claimants. They deliberately delay or refuse legitimate claims hoping that you won’t put up a fight or simply go away. The least you can expect from your insurer is to act in good faith and give you benefit of the doubt.
However, especially some third party insurers may feel that they have no duty of care towards you since you aren’t their policyholder but you are claiming against one of their policyholders. In any case, an insurer is contractually responsible to settle reasonable claims rather than mudding the waters to confuse people and refuse payment. You may have options available to you if you believe the refusal to pay your damages was unfair.
Appealing To the Insurer Against Denial
Most automobile insurance companies have a process to follow if policyholders aren’t happy with their settlements. You can either follow this process on your own and present your case with supporting documents or find a representation. If you choose the latter option, you can employ an independent loss adjuster to help you make the case or talk to an experienced insurance lawyer. If your case is complicated you might want to consider employing someone to represent you.
If you cannot resolve the issue amicably with the insurer you may agree to go through arbitration in which an independent third party (arbitrator) listens to both sides’ arguments and make a ruling on the dispute.
Filing a Lawsuit against the Insurer
Most states regulate claim settlements and define improper claim handling. If your insurer ignored these laws they would give you enough reasons to file a suit against them for improperly refusing your legitimate claim. Here are some of the common reasons that can allow you to pursue the insurer.
- Misrepresenting the coverage or ignoring the provisions of your policy.
- Ignoring the documentation and facts presented by you and others.
- Refusing to accept reasonably established fault and liability.
- Quickly wrapping up a claim unfairly without due investigation.
- Trying to settle for much less than what you can reasonably expect.
If you believe the company acted in bad faith and choose to pursue the insurer in court you will probably need an experienced accident lawyer to help you. You should talk to several of them, find out about their experiences, success rates and costs before choosing a lawyer. If you are lucky your case can be resolved before it goes to full trial through negotiations.
If you find your current carrier to be an unfair company perhaps you wouldn’t be doing any favors to yourself by staying with the company. There are so many great companies to replace a lousy car insurance carrier. Why not get a few quotes right here and see what is your options.