can an insurance company deny a claim? yes, they can and do deny claims regularly. If you find yourself in the unfortunate situation of having to file a car claim, you want to make sure you get the fairest settlement from your insurance company. If a claim appears to be denied in error, you may need to take steps to determine if there is any way to reverse or reconsider the decision.
A good first step is to read the fine print of your policy; This can help shed light on how your insurer pays claims. If your claim was completely denied, you can review your policy to see exactly what was denied and why.
Receiving a denial decision does not have to be the end of your case. If you’ve reviewed your policy and truly feel you’ve been treated unfairly, there may be steps you can take to work with your insurer to reach a decision that both you and the company are happy with. let’s take a closer look at how it might work.
what is an insurance claim denial?
Let’s say you’ve filed a claim after a car accident that left you with several thousand dollars in damage to your car. his policy includes collision coverage, so he’s pretty sure he’ll get a check in the mail soon. instead, he receives a “we regret to inform you” letter stating that his claim has been denied. or he gets a check that covers only a small portion of the damage to his car, much less than his deductible would apply.
This scenario describes an insurance claim denial. the denial may come from your own insurance company. Or, if the accident was the other driver’s fault, it may come from your insurer. either way, it usually means that he doesn’t have the money he needs to repair his car or possibly pay his medical bills if he was injured. his first reaction is probably bewilderment.
why was my claim denied?
Your insurance company has employees, called insurance claims adjusters, whose sole job is to evaluate each claim submitted and determine the company’s legal obligation to pay the claims. The rules and regulations governing liability insurance change on a regular basis, so it’s important to understand what recent laws may apply in your state.
Most claims with documented damage are valid, and depending on the testimony of witnesses present at the collision or the cause of the loss, the claim will generally be approved without incident. But some cases are a bit confusing, and there are several reasons why an insurance claim can be denied. Some common reasons a claim may be challenged and denied include the following:
- Your claim is worth more than your coverage. For example, if you have $25,000 bodily injury liability coverage, but his accident causes $35,000 worth of medical injuries to the other driver, the additional $10,000 would be denied.
- You don’t have the necessary coverage. If the damage was caused by a non-accidental loss and you don’t have comprehensive coverage, for example, your claim may be denied.
- There are discrepancies in your original insurance application. If you weren’t completely honest in your application, or provided completely accurate information, your insurer may refuse to pay an otherwise covered claim. a lack of mileage information or a lack of mention of upgrades specific to your vehicle are examples.
- You were breaking the law during your claimable accident. say you were intoxicated or driving without a license when the accident occurred, even if it is not his fault, your claim may be denied.
- did not report the accident in a timely manner. If you fail to notify the police and your insurer, or seek necessary medical care immediately after the accident, your claim may be denied. If you suddenly decide you have whiplash two weeks after your accident, your insurer has reason to suspect insurance fraud.
- When you have an accident, file your claim immediately with your insurer, providing as much documentation as possible.
- A claim denial can happen for a variety of reasons, but if you think it’s unfair, you can take steps to request a change in your company’s decision.
- If you contest the ruling, a mediator can make a decision on your behalf.
- Your last resort is to go to your state insurance department and file an appeal.
what do you do if your claim is denied?
The possible reasons for claim denial listed above are valid reasons why an insurer might deny your claim, and the reasons would likely stand up in court, if your case went that far. But she may still be wondering, “what do I do if my car insurance claim is denied? Are there steps I can take to make it more likely that you can reverse your decision?”
report the claim immediately
Many insurers allow you to start the claim process through the provider’s website, which means you should be able to do so while you wait for the police to arrive. however, if not, call your agent as soon as possible. Get the other driver’s insurance information immediately after the accident, and never let the other driver talk you out of calling the police. a police report can help significantly when you need to substantiate a claim. As part of your due diligence when starting the claim process, take plenty of photos or even video to verify the extent of the damage.
make sure your claim is with your own company
It’s a good idea to avoid filing a claim with the other driver’s insurer whenever possible, even if that company should pay because it was the other driver’s fault. Through a process called subrogation, your insurer can help you recover expenses from the other driver’s insurance company. Since your insurer has more insurance and legal experts than you, let them do the heavy lifting.
get detailed estimates
The more information you have, the better the outcome of your claim. One way to do this is to ask your repair shop to provide you with a detailed, itemized estimate for the repairs. don’t make the mistake of going anywhere for your repair quotes.
If you don’t have a mechanic you trust, ask your friends and family for recommendations and get quotes from those shops. If your insurer tells you to get an estimate from a certain store, do so, but also provide additional estimates from other stores to check current rates.
get estimates based on original factory (oem) parts
You have the right to have your car returned to you after repairs in the same condition it was in before the accident. For some insurers, you need a specific clause in your policy to request original equipment manufacturer (OEM) parts—that’s something to ask about when you sign up for your policy. even if it costs a few dollars more, it is a good idea to invest in this coverage.
know your rights if you disagree with the car insurance agreement
If your car is a total loss, be prepared for the payment to be less than what you owe on the car, or less than you think the car is worth.
Car insurance companies typically insure cars based on “actual cash value” (ACV). This means that the resale value will determine what compensation you will be provided to replace your car. Depending on the service they use to determine market value, the exact amount may vary from company to company.
If you think your car is worth more than the ACV, you may need to do a little legwork to prove it. Possible factors could include how well you took care of the car, if you kept it in the garage, if it had very low mileage, and if you performed regular maintenance work. this may require receipts and documentation, so if you care for your vehicles in this way, it’s important to keep all receipts and documents.
how to contest a claim denial
If you think you have a valid reason to dispute a claim denial, request a dispute and try mediation first. you will not need legal representation when requesting a dispute and mediation, and it is less expensive.
do not sign any paperwork agreeing to a settlement amount or cash any insurance checks until you have considered the process of filing a dispute; the act of cashing a check may constitute acceptance of settlement and you may not be able to dispute your case after that.
When you have requested mediation, the neutral party, the arbitrator, will generally first choose a neutral repair shop to give an estimate. after reviewing the information from both parties, they will decide for or against you.
You can also hire an independent claims adjuster who can work with the mediator and the insurance company and is there to serve your interests, not those of the insurance company.
If you’re still not satisfied with the results of mediation, your next step would be to hire an attorney or go to your state insurance department, which will arbitrate the case. the person conducting the arbitration will be an adjuster who will consider information from both parties and make a legally binding decision.
the takeaway
conclusion
In the event of an auto insurance claim denial, what steps can you take? Be sure to document everything from medical bills to police reports to repair estimates. if you need to, you can ask a mediator to intervene to assess the situation. If even that doesn’t help, your state insurance department is the last resort to adjust or change a claim. Knowing your policy coverage and your rights as a policyholder is essential to knowing what expectations to have regarding the payment of claims.
