You were involved in an accident. You submitted a claim to your auto insurance company, and have been patiently waiting for their reply. When you hear back, you find out that your car insurance claim was denied. Now what?
Dealing with an auto insurance claim denial can be frustrating, time-consuming, and expensive, depending on the specifics of your case and how you choose to respond. Informing yourself of your options now will better prepare you to react to a claim denial down the road, should your insurance company surprise you with one.
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Why Was My Claim Denied?
A “claim denial” is an umbrella term—there are a variety of reasons why your auto insurance company may deny your claim. Traditionally, you’ll receive a letter stating a specific explanation for the denial.
Some of the most common reasons for an auto insurance claim denial include:
- If the accident could have been avoided or was caused by your actions. For instance, an accident that occurs while you are driving under the influence or allowing an uninsured, or unlicensed, driver to drive your car may not be covered by your policy.
- If you didn’t seek medical treatment immediately after an accident. From an insurance standpoint, it’s important to seek medical treatment immediately for any injuries caused by an accident. Delays in treatment lead to suspicion that your injuries could have been caused by something other than the accident. Always make sure to get proof that you went to the hospital or saw a doctor if you receive any injuries related to a car accident. Without medical records, an injury claim is susceptible to denial. Also note that your insurer may not pay out for injuries related to preexisting conditions.
- If your policy doesn’t include the coverage you filed a claim under. For example, if you file a claim for repairs to your vehicle after an accident, your claim won’t be accepted unless you carry collision coverage. The same goes for other types of coverage: if you don’t have it, your insurance company won’t pay out for damages or injuries.
- If your coverage lapsed. If you let your policy lapse, any coverage that you file a claim under no longer protects you.
- If you purchased a new vehicle without informing your insurance company. A claim is likely to be denied if the vehicle involved in the accident wasn’t explicitly listed on the policy.
- If the damages that you’re filing for exceed your policy limits. Insurance payout won’t exceed the monetary limits of your policy. Filing a claim to do so will likely be denied, though there are some exceptions, such as stacked insurance.
What Options Do I Have Now?
If your claim has been denied, you’re likely wondering where to turn. You have a few options when to comes to responding to the denial, but it’s important to take two steps before determining any further course of action:
- Understand exactly why your claim was denied. If you’re still not sure why your claim was denied after reading the correspondence from your insurance company, talk to your insurer. If the denial was due to a small error, ask if you can fix any problems and resubmit the claim.
- Verify that the claim is valid. Even insurance companies make mistakes sometimes; it’s possible that your claim was processed incorrectly. If the reasoning provided in your claim denial doesn’t match the facts that you provided to your insurance company in your claim, you have grounds to dispute the denial.
If you decide to dispute the claim, you can:
- Send corrections directly to your insurer. Your insurance company may be willing to negotiate.
- Contact your state insurance commissioner. State insurance commissioners are appointed to assist with insurance regulation.
- File suit for bad faith with the help of a lawyer. If you believe that your insurance company is refusing to fulfill their end of the contract that your policy outlines, you may consider seeking legal help.
Do I Need to Contact a Professional?
Involving a professional—in this case, a lawyer—is a personal decision that will be influenced by the severity and specific circumstances of each case. Some experts recommend that it’s best to contact a professional if your claim is denied, but know that involving a lawyer can be time consuming and very costly. Explore your options and ensure that you understand your insurance company’s reasoning when deciding whether to seek legal assistance.