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Why Your Auto Insurance Claim Can Be Denied

Jason Metz

Other than residents of New Hampshire, auto insurance is something you’re required to purchase, and many of us don’t think about the coverages we need, until we actually need them.  Few things can be more frustrating and stressful than having a claim denied. With expensive auto repair, property damage, and medical bills, you could potentially be out-of-pocket thousands of dollars. Let’s look at several reasons why your auto insurance claim can be denied. To avoid a denial, it may make sense for you to adjust your coverages accordingly.


Filing a Claim for Coverages You Don’t Have

Simply put, if you didn’t purchase a specific coverage, you can’t expect for a claim to be honored. If your car is stolen and you didn’t purchase comprehensive insurance, you won’t be able to file a theft claim. Similarly, if you’re at fault for an accident and didn’t purchase collision insurance, you’d be responsible for the damages to your car. Consider your specific needs and what coverages are applicable to your situation.


Policy Exclusions

If you took out a personal auto insurance policy, but use your vehicle for commercial use, your claim could be denied. It’s a good idea to consider exactly what circumstances you’ll use your vehicle for and to speak with your agent regarding what coverages you’ll need. If you’re using your vehicle for a car-sharing program, or a service like Uber or Lyft, your policy may not cover you for incidents while it’s being used for those services. You’ll want to review your policy, the terms and conditions of whatever ride-sharing or livery service you’re participating in, and discuss this with your agent as well.

Your claim also may be denied for modifications you’ve made to your vehicle. Whether you’ve installed a new stereo system or had a custom paint job, these modifications may be excluded from your policy or may require additional premium. Again, you’ll want to check with your insurer to determine if your modifications are covered.


Policy Lapse or Gap

If you haven’t taken the proper steps at the renewal period, your policy may have lapsed, and therefore you wouldn’t have coverage. If you’ve purchased a new policy, make sure you avoid a coverage gap by confirming the exact dates and times of when your old policy cancels and your new policy takes effect.


Policy Limits

Every policy has limits, and if your claim exceeds these limits, there’s not much you can do. When you purchased your policy, you selected the type and extent of your coverages, and your premiums were adjusted to that effect. Now may be a good opportunity to review your policy limits and decide if they’re enough. Did you only purchase the bare minimum as mandated by your state? For example, do you have enough coverage for property damages if you were found at-fault for an accident? Keep in mind, as cars become more advanced, they can be more expensive to repair. Many vehicles have expensive sensors in them, and replacing a bumper may entail replacing the sensor as well. This study from the Insurance Institute for Highway Safety illustrates how a front bumper repair can cost almost $5,000.


Violation of State Laws

Driving under the influence, driving with a suspended license, or illegally racing your vehicle are a few reasons why your auto insurance claim may be denied.  


Filing a Fraudulent Claim & Policy Misrepresentation

This should go without saying, but filing a claim that is false in nature is cause not only for denial, but possible criminal prosecution. Examples range from getting into an accident and claiming your car was stolen or staging an accident to file false injury claims.

Policy misrepresentation could be anything from not listing regular operators of your vehicle to inaccurately listing where you garage your vehicle. For instance, if you live and keep your car in a city, where your risk of loss is greater and premiums would therefore be higher, but claim your vehicle is garaged at your parent’s house in the country, where the risk is much lower, the proper premium is not being collected. In this scenario, it may be determined this was a policy misrepresentation, and your claim could be denied.

These are just a handful of reasons why your auto insurance claim could be denied. The bottom line is you want to make sure you have the coverages that you need and that you accurately report how your vehicle is being used to better ensure your claim is not denied. You may want to compare quotes with different carriers that offer coverages that better suit your needs. However, if your claim is denied, and you feel your carrier is in the wrong, there are steps you can take to rectify the situation.


  1. 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 them. If the denial was due to a small error, ask if you can fix any problems and resubmit the claim.


  1. Verify that the claim is valid. Even insurance companies make mistakes; 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.



  • 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.