When you purchase auto insurance, you do so hoping that you will never have to use it. More often than not, auto insurance is viewed as a safety net in case something bad happens. When you get in an accident, you might assume that your auto insurance company will pay for any claims covering injuries or vehicle damage whether it is for yourself and your passengers or for the other party.
Nevertheless, auto insurance claims do get denied. It is important to understand the reasons for claim denial so you can prepare yourself for the next steps which could include an appeal. The most common reasons for denial include non-existent, insufficient, or lapsed coverage, drivers who are not covered by the policy, business travel, pre-existing medical conditions, failure to seek medical attention, delay in filing a claim, and breaking the law.
Denial due to Coverage
1. Policy Does not Cover the Claim
Firstly, determine if you live in a fault or no-fault state. The majority of states in the US are fault states meaning that the driver who is determined to be at-fault is held responsible. If you get in an accident and the other driver is at-fault, their liability insurance should pay for the damages and medical bills incurred by you.
If you live in a no-fault state, you should have Personal Injury Protection insurance which covers your medical bills regardless of fault. Note that you will need to have opted to add collision coverage which pays for damages your car sustains. If you did not choose this optional coverage, you will have to pay for your own car repairs or replacement costs. Here is the list of no-fault states: District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.
When you review your auto insurance policy, look out for the following:
- Collision Insurance – Optional coverage which pays for damages to your car in an accident
- Comprehensive Insurance – Optional coverage which pays for damages to your car due to other causes including theft, vandalism, explosion and fire.
- Personal Injury Protection – Mandatory only for no-fault states – Pays for medical expenses and loss of income
- Medical Payments Coverage – Optional coverage which pays for medical expenses regardless of fault.
- Uninsured Motorist & Underinsured Motorist Insurance – Optional coverage which pays for medical expenses caused by drivers who don’t carry enough liability coverage to cover your bills.
To best protect yourself against costly out-of-pocket expenses in an accident, make sure your policy is outfitted with enough coverage to protect yourself, your vehicle, and any other drivers and vehicles that may be involved in your accident.
2. Claims Exceed Policy Limits
If you are in an accident with another driver determined to be at-fault, their liability insurance will pay for your injuries and car repairs. However, there are limits to the amount paid out by their liability insurance. This depends on the coverage they purchased. For example, the minimum liability insurance in California is 15/30/5. What this means is that the maximum amount paid out for your bodily injury is $15,000, the maximum amount paid out total for injury/death in an accident involving multiple passengers is $30,000 and the maximum amount paid out for your vehicle is $5,000. If your medical bills or car repair costs exceed those caps, you will not be paid out by the other company’s liability insurance.
3. Lapsed Coverage
Unfortunately, your claim will be denied if there are gaps in coverage dates or you have missed a payment. A gap in coverage could occur if you have recently switched policies without verifying the policy dates. Your insurance may also not be auto-renewed so it is your responsibility to make sure that you are always covered. Check coverage dates and your paid invoices to be certain.
4. Non-covered Drivers
When you apply for auto insurance, you will need to state who the covered drivers are on the policy. Your claim could be denied if the driver at the time of the accident is a family member or friend who is not listed on your policy. Therefore, it is important to list all possible drivers on your auto insurance policy.
5. Driving for Business Purposes
Another lesser known reason for the denial of claims is when if you get in an accident while driving the car for business purposes. If your policy is solely for personal use and if you have not notified your car insurance company that you also drive it for business, you could have your claim denied.
Denial due to Timeliness of Filing
1. Too Much Time Passed Before You Reported the Accident
If you are ever in an accident, don’t wait to report it to the police or your insurance company. If you wait too long, your insurer may argue they didn’t have sufficient time to process your claim. There are often deadlines to filing claims. If you’re unsure how long you have to file a claim, take a peek at your policy. Most policies will have a section dedicated to this question.
Denial Due to Medical Claims
1. You Failed to Seek Medical Attention
If you are trying to file a claim because you were injured in an accident, but never sought medical attention, don’t expect your insurer to approve your claim. The sooner you get medical attention and report your injuries to your insurer, the better chance you’ll have at having your claim approved. If you fail to do so, your insurer may have doubts that your injuries were caused by the accident and will deny your claim.
2. Pre-Existing Medical Condition
When an adjuster looks into your medical claims, they will also obtain your medical records. If you have a pre-existing medical condition, your claim may be denied. The adjuster could argue that the accident was unrelated to your injuries. Therefore, you will need to prove that the accident worsened the pain.
Denial due to Breaking the Law
Depending on your offense and insurer, no amount of coverage will be enough to convince your insurance company to approve your claim if your accident happened because you broke the law. Common law violations that often result in denied claims include driving while intoxicated, driving under the influence of drugs, driving without a license, and speeding.
What To Do If Your Claim Is Denied
If your claim is denied, you should review your coverage, the circumstances around your accident, and the evidence you have. For starters, contact your insurer and request a letter explaining why your claim was denied. If you feel you were wrongfully denied, you should file a timely appeal providing additional supporting evidence. Insurance companies are required by state insurance commissioners to allow you to appeal through an appeal process. Reach out to your state insurance commissioner for assistance. Each state has an insurance department designed to help consumers resolve claim disputes.
If your appeal is denied or you feel you have been treated unfairly during the claims process, you could consult an auto accident lawyer. They can provide further advice including the possibility of suing your insurance company or the other party.
There are a number of reasons why your insurance company may deny your claim. Whether you are caught driving without a license during an accident, lack adequate coverage, or missed a claim deadline, simply having auto insurance is not a guarantee your claim will be approved. It is important to understand the different types of auto insurance coverage and your consumer rights. Fortunately, there are options available to help you dispute a claim, such as your state insurance commissioner.