A car accident can be stressful enough. But it gets worse when your auto insurance company denies your claim. An insurance company may refuse to pay an auto claim if there is a valid reason. It is important to understand why your claim was denied. This includes the letter explaining what you should do in this situation.
Understand your claim denial letter
If a car insurance claim is denied, the insurance company will send out a claim denial letter. The insurance adjuster will explain the reasons for the decision in this letter. To fully understand the reasoning of the insurer, it is essential to read the complete claim denial letter.
You have the right to appeal against the decision of the insurance company if you disagree with the denial of your insurance claim.
Find out why your car insurance company denies your claim
There could be many factors that lead to your claim being denied, depending on how the circumstances are. A submitted auto insurance claim can be affected by eyewitness statements, police reports, and recreating an actual accident scene. You should carefully read any denial letters you receive. It will usually include supporting evidence.
These are some of the most common reasons that a claim is denied:
Policy for lapsed insurance
In the event of an accident, claimable event or other unforeseen circumstance, the insurance company will not pay for any coverage if there is no valid insurance. Paying for auto and home insurance on time or even early is the best way to ensure coverage is in force when you have to file a claim. It doesn’t matter if you use auto-pay or pay in full for the policy term, it is important to avoid a lapse in coverage. In addition to the likelihood of your claim being denied, a lapse in coverage could also result in fines depending on the state you live in.
Exclusions from the policy
When you purchase car insurance, pay attention to the coverages you choose and what they provide financial protection for. You may feel that collision coverage is unnecessary if your car is older. Without the right coverages, your insurance company won’t be able to help you if your car gets stolen or is involved in an accident.
The adjuster will be able to review your claim and see the inclusions of your policy. A claims denial letter will be sent to you if you file a claim for damage for which there is no coverage or for which the policy excludes.
There is not enough coverage
It can be tempting to choose state minimum liability limits to keep the cost of car insurance low. You may be able to save some money on your premium, but you could end up with no liability limits if you cause multiple injuries or damage to another vehicle or structure. For example, say you have $25,000 in property damage liability coverage, but you total a car worth $40,000. An auto insurance company will pay the $25,000 limit, but not the $15,000 remaining. This could make you vulnerable to a lawsuit.
You might also want to consider other reasons why your car insurance company may deny a claim.
There are other reasons why an auto insurance company may deny a claim, such as if you commit a crime that results in an accident, do not have a valid driver’s license or are an excluded driver on a policy. These are all common reasons why an insurer may deny a claim. These are just a few reasons why an insurer might deny a claim.
- You were in an accident with an uninsured motorist: While most states require liability coverage, not all of them require uninsured motorist coverage. If someone causes an accident with you and provides false insurance information or does a hit-and-run, finding proper insurance details may be either difficult or impossible. If you have uninsured driver coverage, you can file a claim with your insurer to pay for your injuries or damages.
- Your claim was denied by the at-fault driver’s insurance company: There could be many reasons that an auto insurance company denies your claim if another driver is at fault. Incorrect insurance information, inadequate coverage, or insufficient coverage are just some examples. Additionally, if an accident occurs in a no-fault state, you are responsible to pay for your own medical expenses and lost wages.
- Your claim was denied in bad Faith: An insurance adjuster who denies a claim in bad-faith means that they have no basis to reject the claim based on the evidence. Your claim could have been incorrectly denied in this instance. Although you may need to provide additional documentation, you have the right to appeal the decision to deny your claim.
Appeal the denial of your car insurance claim
You can appeal a decision by the car insurance company denying your claim if you feel it was wrong. Most insurance companies have a process in place for you to combat a denied claim. These are the steps you should consider when appealing an insurance claim decision.
- Gather evidence: Examine any documentation from the insurance company. These could include photographs, eyewitness information and police reports. You can make copies of all the evidence to give to your insurance company.
- Write an appeal letter: This will explain why you disagree with the insurance company’s decision. Be sure to explain the reasons for each piece of information provided in step 1. You should provide as much detail as you can, referring to policy information and the claims rejection letter where necessary.
- Hire an attorney: An attorney is a great idea if you don’t feel confident taking these steps, or need an expert’s advice. The attorney can review your case and all supporting documents in order to draft a demand letters requesting that the insurance company respond to the claim. It may be costly, but it can be worth it to have your claim overturned if it feels you were wrongly denied.
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. While most claims denials are valid in most cases, some may not. Appealing to the insurance company can reverse the decision or offer damages.