You buy a policy to protect yourself against many unknown damages and/or liabilities. Most people don’t even think about possible repairs and injuries when they buy automobile insurance. They arrange it because it is a sensible thing to do. But one day you may suffer losses and feel that it is time to ask some help with it. After all, you paid to have this privilege.
Say you decided to seek compensation for the damages to the vehicle or medical expenses for accident related injuries. You contacted the relevant provider in time, fill out the forms, sent the police and/or medical reports, estimates and any other documents asked of you and answered all the questions. Nevertheless, you find out that your claim is 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. They have to explain their decisions and rational behind it. That letter would be the starting point in any further action you may take.
- Disputed Liability: This is often seen when third parties are involved. Someone else caused the accident but they or their provider is now disputing their fault 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 they will try to disprove to get out of covering 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 included in the policy. That is why it is key that you buy sufficient protection.
- Misrepresenting Facts: You need to provide accurate and honest information when you are filling out proposal forms or giving them over the phone. Any deliberate attempt to fool carriers 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 the actual residence where the car is mostly kept. This sort of dishonest representations are usually illegal that not only can lead to rejection but also criminal charges. Drivers also need to inform carriers of any material changes in circumstances like someone new moving into home.
- Policy Exclusions: There are some common exclusions used to get out of paying. 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 it. Furthermore, there may be specific exclusions that leads to refused settlements. For example, an excluded driver that shouldn’t have been driving it might have caused the accident.
- Lapse in Vehicle Insurance: If a premium installment was somehow not paid a 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 the premium is paid in time and any unfortunately lapses are avoided.
- Failure to Notify: One of the most notable failures would be not to inform them of the losses or incidents in time. A policy may actually have a cut off point for claims like thirty days. Beyond that adjusters can argue that they were not given the chance to investigate the incident in a timely manner.
- Business Use: Business use of a personal auto may not be covered by personal auto insurance. You need to discuss with the agent if you ever carry paid or work related passengers or goods and see if you could add business use. Otherwise, you may need to buy a commercial plan.
What to Do when a Car Insurance Claim Denied?
After all the work and frustration, you may get a letter informing you of the 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 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 company is acting in bad faith. Some use tactics to intimidate and wear down applicants. They deliberately delay or reject hoping that you won’t put up a fight or simply go away. The least you can expect is to act in good faith and give you benefit of the doubt.
However, especially some third party providers may feel that they have no duty of care towards you since you aren’t their customer but you are up against one of their policyholders. In any case, they are contractually responsible to settle reasonable losses rather than mudding the waters to confuse people. You may have options available to you if you believe the refusal to pay was unfair.
Appealing To the Insurer Against Denial
Most of them have a process to follow if customers aren’t happy with settlements. You can either follow this process on your own and present the 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 lawyer. If it is complicated you might want to consider employing someone to represent you.
If you cannot resolve the issue amicably 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 handling. If they ignored these laws they would give you enough reasons to file a suit against them for improperly refusing a legitimate demand. Here are some of the common reasons that can allow you to pursue the company.
- Misrepresenting the coverage or ignoring the provisions.
- Ignoring the documentation and facts presented by you and others.
- Rejecting to accept fairly clear fault and liability.
- Quickly wrapping it up unfairly without due investigation.
- Trying to settle for much less than what you can justifiably expect.
If you believe they acted in bad faith and choose to pursue them 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 the case can be resolved before it goes to full trial through negotiations.
If you find the current carrier to be unfair perhaps you wouldn’t be doing any favors to yourself by staying with them. There are so many great ones to replace a lousy firm. Why not get a few quotes right here and see what is available.