Once a vehicle insurance company denies a claim, they have to lay out the reasons in letter, which could be lack of coverage, exclusions and conditions in the policy, disputed liability, failure to submit the claim in time, unaccepted use of the vehicle and misrepresentation of the facts. The insurer may have gotten it wrong this time or refuse the claim legitimately. Policyholders can try to reason with their insurers, choose to go to ombudsman for mediation or sue the company if they aren’t going anywhere with the other options and feel they have a case.
Once a company receives an auto insurance claim, they usually have thirty days to start investigating the circumstances that led to losses. They usually appoint a loss adjuster to inspect the damages and gather facts. Then, they have to document their findings and explain why they are denying the entire claim or part of it. It is hard to argue with something like not having car insurance coverage for the losses suffered but there are many other reasons people can dispute and get the insurer to overturn the refusal or go to court.
Automobile insurers have to explain their decisions and rationale behind it in a letter, which would be the starting point in any further action you may take. Here are the common reasons for car insurance claim denials;
- 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 and 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 a police report, take many pictures, and get details of witnesses just in case you need to prove that someone else caused it.
- No Coverage: Automobile insurers aren’t going to pay for something that wasn’t included in the car insurance policy. That is why it is key that you buy sufficient protection. People may be claiming for something that isn’t covered or reached their policy limits. For example, Vehicle insurers will not pay for a rental car while yours is being repaired by insurance if you don’t have Rental Car Reimbursement coverage.
- Misrepresenting Facts: You need to provide accurate and honest information when you are filling out proposal forms or giving details over the phone. Any deliberate attempt to fool carriers into giving you cheap auto 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. These sorts of misrepresentations are usually illegal and not only can lead to claim rejection but also criminal charges. Drivers also need to inform insurers of any material changes in circumstances like a new driver moving into their home.
- Policy Exclusions: There are some common exclusions. 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. Furthermore, there may be specific exclusions that lead to refused automobile insurance claims. For example, an excluded driver that shouldn’t have been driving the car might have caused the accident.
- Lapse in Vehicle Insurance: If a premium installment was somehow not paid, a policy would have lapsed after the notice period. Carriers are required to inform policyholders about a missed payment and serve a cancellation notice. So, this notice will be decisive in determining if the policy has expired at the time of the accident or not.
- 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 and this usually changes depending on the state. Beyond that, adjusters can argue that they were not given the chance to investigate the incident in a timely manner. For example, some states require motorists to report their injuries to their auto insurers within a certain period after an accident.
- Violation of Laws:If state or federal laws are broken like driving while under the influence or intoxicated or driving without a license, vehicle insurers can refuse to pay for your claim.
- Pre-existing Damages:Claim adjuster inspect the damaged automobile and determine if damages claimed were really due to this accident. They may agree to pay some of the damages and exclude the damages they suspect to have existed before the accident.
- 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. At times, what they describe as business use may actually be considered reasonable according to your state rules. Some states are known to accept things like pizza deliveries as legitimate use of a personal automobile.
It would be a very unpleasant experience to get your claim rejected but you need to look at the letter you received from your automobile insurer and decide what to do next. If you don’t agree with their assessments, you can send your supporting evidence like photos of the accident or police report and see if that will help. You can always lodge a complaint against the company through your state’s insurance commissioner. And finally, you may need to consult with a legal professional to see if you have a case and take it from there.