Car insurance is mandatory in most US states. And if you’re required to purchase a policy, then you expect to get help when you need it. But an auto insurance provider can refuse to pay a claim. Here are some of the most common reasons why a car insurance claim is sometimes denied.
1. Inappropriate Coverage
Different policies cover different situations. For instance, perhaps you want coverage that pays for damages you cause during an auto accident. Liability coverage is an option that would pay for the damages you cause someone else. But it wouldn’t pay for the damages to your vehicle. So if you filed a claim to cover damages to your car, your insurer would deny the claim. It’s important to understand what your auto insurance policy covers before attempting to file a claim.
2. Missed Deadline
The sooner you file your claim, the better. The time limit for filing a claim depends on the law in your state and your insurance provider. For example, the time limit for filing a claim for property damage or injury in New York is 3-years. But your policy might stipulate you have to file within 48-hours of an accident. Technically, as long as you’re within your state’s statute of limitations, then you have the right to file a claim. But your insurer might object, refuse to pay the claim, or pay much less than you deserve.
3. Driving Under the Influence
Driving under the influence of drugs or alcohol is illegal. For this reason, your insurer may or may not deny your claim if you cause an accident. If you have liability, then the insurer is more likely to pay for the damages you’ve caused to someone else. But if you have coverage that pays for damages to your vehicle, the insurer might choose to deny the claim. The insurer can also raise your premiums or drop your policy.
4. Damage Dispute
The insurer might disagree with the damages you’re claiming. For example, perhaps your car door has a dent following an accident. You file a claim, and the insurer disagrees that the dent was caused during the accident. Or perhaps the insurer disagrees about who is at fault for the damage. When there’s a dispute over the cause of the damage, your insurer can deny your claim.
5. Lapsed Coverage
Paying auto insurance premiums on time is important. If you constantly pay late, then your insurer can cancel your coverage. So you might file a claim thinking you were covered at the time of the accident but you weren’t. The insurer can also deny a claim if you still have coverage, but the policy had lapsed during the time of the accident. Your policy may also have a grace period, which means you’ll still have coverage even if you haven’t paid your premium. But unless you pay by the time the grace period ends, your coverage will get canceled.
6. Excluded Driver
An excluded driver is anyone who isn’t listed on your auto insurance policy. Perhaps you let your son use your car for the afternoon. He’s not listed on your policy, and he caused an accident. That means any claim you file will likely get denied because your son isn’t listed as an insured driver. If you lie and say you were driving the vehicle, then that’s a fraudulent claim. Not only will that get your claim rejected, but you can possibly face felony charges.
When a Claim is Refused: Next Steps
You can dispute the insurer’s decision. But first, you need to know exactly why the claim was denied. Contact your insurer and request an official denial letter. The letter should explain in detail why the insurer denied the claim. If you feel the denial is unjust, then you can challenge the decision.
There are generally two options when challenging an insurance company. You can approach the company on your own and state your case. You’ll need evidence to back up your statements. It helps to have an official police report, photos of the damage, any medical reports, and contact information for any witnesses. If you’re uncomfortable dealing with the insurer on your own, then you can contact an attorney.
Having an attorney is often recommended when dealing with legal matters. An attorney can also discover if your insurer has treated you unfairly or engaged in bad faith practices. You may even have a breach of contract situation. These are things you might not discover if you handle the situation on your own.