When you buy auto insurance, you probably hope you’ll never have an accident and have to file a claim. but if you ever have to file one, you hope your policy is worth it. Unfortunately, insurance companies can and do deny policyholders’ claims on occasion, often for legitimate reasons, but sometimes not. Whether an accident or stolen car insurance claim is denied, it’s important to understand the main reasons your claim could be denied and what you can do if it happens.
why claims are denied
Claims adjusters, the people who research insurance claims for a living, say these are the most common justifications insurers use for denying a claim or paying less than full amount.
Policy limits. Each policy has limits on how much it will pay in the event of an accident, and if your claim is more than your coverage limits, you could keep the excess. For example, the limit on your property damage liability coverage (the kind you pay if you damage someone else’s car or other property) might be $10,000. That might be adequate in some cases, but a problem if you rear-end, say, a $400,000 Lamborghini. States set minimums, such as $10,000 or $25,000, for liability coverage, but you can choose a higher limit by paying more.
The amount of money you are likely to recover will also be affected by your deductible – the amount you must pay out of pocket for a claim before your insurance kicks in. For example, if your deductible is $500, the first $500 is your responsibility, not the insurer’s. The higher your deductible, the less you’ll pay for insurance each year, but the more liability you’ll have if you’re in an accident.
policy coverage. An automobile policy consists of several different types of coverage. These include property damage liability (described above), collision coverage (which pays for damage resulting from a collision with another car or if you hit, say, a utility pole), and comprehensive coverage ( which covers damage from other causes, such as fire). or vandalism). Your state may require some coverage, but other types may be optional. For example, if you choose to have only limited liability coverage, you won’t be covered if your car is stolen.
Breaking the law. Even if you have the right types of coverage and the right amounts, your insurer may deny your claim if you broke state law when the accident happened. an example of that would be driving without a valid license. another is if you were driving while intoxicated.
Additional reasons. An insurer may also deny a claim on the basis that the accident was preventable on your part or if it believes your claim is fraudulent. Among the red flags that insurers routinely monitor are:
resolve a claim dispute
If you believe your claim was denied in error or you received improper compensation, contact your state insurance department. ask how to file a complaint and what to do next.
Auto insurance is regulated at the state level and many states have a special unit created to deal with these types of problems for policyholders. For example, in California, the Department of Insurance’s claims mediation program will help consumers negotiate a disputed claim with their auto insurance company in many circumstances.
If all else fails and there is a large enough amount of money at stake, consider hiring an attorney to represent you.