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What to do if a car insurance company denies your claim

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A car accident is stressful but can become even more of a headache if your car insurance company denies your claim. Depending on the type of loss, your car insurer could have a legitimate reason for doing so, but that might not always be the case. If a claim denial happens to you, understanding the reason for the rejection can help you plan what to do next.

What’s a claim denial letter?

After you file a claim with your auto insurance company, an insurance adjuster will be responsible for documenting the details of the accident. After analyzing the facts provided, the adjuster will determine whether or not the car insurance claim will be denied or accepted. If the accident is deemed not covered by your auto insurance policy, the insurance company will send you a formal letter stating what factors led to the decision.

A denied car insurance claim doesn’t necessarily mean the end of the claims process. If you do not agree with your insurer’s claim denial, you have the right to appeal the insurance company’s decision.

Why did my car insurance company deny my claim?

Depending on the circumstances surrounding your car insurance claim, several factors could result in your claim being denied. Police reports, eyewitness statements, recreating an accident scenario and more can influence the outcome of a submitted auto insurance claim. In some cases, a claim could even be denied due to bad faith or misrepresentation of the facts, making it important to be truthful and accurate to your car insurance company when reporting your claim.

If you receive a denial letter, read it carefully, as it will typically include supporting evidence for the decision. Some common reasons a claim is denied include the following:

Lapsed insurance policy

Without valid insurance in place at the time of an accident or claimable event, there is no coverage for the insurance company to pay out. Paying your auto and home insurance premiums on time is the best way to ensure coverage is in force when you have to file a claim. Whether you pay the policy term in full or use auto-pay to prevent missed payments, avoiding a lapse in coverage is crucial. In addition to the likelihood of your claim being denied, a lapse in coverage could also result in fines and other penalties, such as a suspension of your driver’s license and vehicle registration, depending on your state.

Policy exclusions

When you purchase car insurance, pay attention to the coverages you choose and what they provide financial protection for. For example, you may have an older car and feel comprehensive and collision coverage is not needed. However, if your car is stolen or you cause an accident, the insurance company will not be able to assist without the proper coverage.

When reviewing your claim, the adjuster can see your policy’s inclusions. Filing a claim for damage that you either lack coverage for or that is specifically excluded will result in a claims denial letter being sent by your insurer.

Not enough coverage

It can be tempting to choose state minimum liability limits to keep the cost of car insurance low. While you may save on your premium, if you are involved in an accident with several injuries to others or hit an expensive car or building, you may exhaust your liability limits and be vulnerable to a devastating financial loss. For example, say you have $25,000 in property damage liability coverage but you total a car worth $40,000. The auto insurance company can pay up to the $25,000 allotted, but deny the remaining $15,000, which could leave you vulnerable to a lawsuit for the remaining amount.

Accident involving an uninsured motorist

While most states require liability coverage, not all require uninsured motorist coverage. If someone causes an accident with you, provides false insurance information or does a hit-and-run, finding proper insurance details may be difficult or impossible. If you do not carry uninsured or underinsured motorist coverage, your claim could be denied.

At-fault driver’s insurer denied your claim

In instances where another driver is considered at fault, and their auto insurance company denies the claim, there could be several reasons why. Some examples include providing incorrect insurance details or not having enough or the right coverage. Additionally, if an accident occurs in a no-fault state, you are responsible for paying for your medical expenses up to your policy’s limits.

Appeal your car insurance claim denial

You can appeal the decision if you feel an error in the car insurance company’s claim denial. Most insurance companies have a process in place for you to contest a denied claim. Here are some steps to consider taking in appealing an auto insurance claim decision:

  1. Gather evidence: Review any documentation provided by the insurance company and gather the evidence you need to appeal. This could include police reports, eyewitness information, photographs, medical reports and other supporting evidence. Make copies of everything to provide to the insurance company so you can keep the originals.
  2. Draft an appeal letter: This letter will spell out why you do not agree with the insurance company’s decision. Make sure you explain why each piece of information was provided in step one, such as any police reports. Provide as much detail as possible, referencing policy information and the claims denial letter as needed.
  3. Consider hiring an attorney: If you are not comfortable taking these steps or want an expert’s opinion, it may be a good idea to hire an attorney. They can review the case and supporting documents to draft a demand letter requiring the insurance company to respond and defend its claim denial. While it may cost you money upfront, it could be a worthwhile expense to have the claim denial overturned if you feel your insurer made the wrong decision.

Understanding the claim denial letter and why an auto insurance company decided not to make a payout is the first step in determining the validity of a denied car insurance claim. Most instances of auto claims denials are valid, although others may not be. In this case, appealing the insurance company’s decision can get the decision reversed or an offer made to cover the damages.

Learn more: Compare car insurance quotes

Written by
June Sham
Insurance Writer
June Sham is an insurance writer for Bankrate. Before joining the team, she worked for nearly three years as a licensed producer writing auto, property, umbrella and earthquake policies.
Edited by
Insurance Editor
Reviewed by
Director of corporate communications, Insurance Information Institute