Buying car insurance is an essential part of owning and operating a vehicle. Unfortunately, having a policy doesn’t mean that filing an insurance claim will result in compensation after an accident. Auto insurance claims can be denied for various issues like inaccurate details, misunderstandings of coverage, and general policy violations. Luckily, there are actions you can take to help boost your chances of getting an auto insurance claim accepted.
What is an auto insurance claim?
You probably know what auto insurance is by now, but what does it mean to file an auto insurance claim? A claim is a request for coverage under a policy made by a policyholder to their insurance company. The claim usually addresses the damage to your or someone else’s vehicle following an incident, such as a collision, theft, or vandalism. The claim process typically involves reporting the incident, providing relevant details, and submitting necessary documentation.
Just because you have purchased auto insurance coverage, doesn’t guarantee that coverage will apply. Understanding how and why claims may be denied is crucial for drivers to help avoid financial setbacks, confusion, and stress.
The claim process
If you get into a collision or accident, you’ll typically need to file an insurance claim. But how does a driver begin this process?
The auto insurance claim process can begin with a driver reporting the incident to their insurer. This first step, known as FNOL (first notice of loss), is the initial action drivers can take when experiencing loss or damage. For straightforward claims, a reported accident might stay as an FNOL. For more complex issues that aren’t as cut and dry, a claim can be passed on to an insurance adjuster in the area where the loss was reported.
When reporting an FNOL, you may have to provide information about your policy as well as details about the accident or loss. Depending on the claim, insurance companies can request extra information, such as photo or video documentation.
Once a claim is initiated, the insurance company can have an adjuster contact all parties involved. They may take statements from everyone involved in the accident or loss, including if any witnesses were present. Once the statements are reviewed, the adjuster can make a liability determination as well as determine what coverage may apply to the loss.
Impact of claim denials
A claim denial can affect a driver’s finances and personal well-being. Though there are ways to help avoid a claim rejection, drivers should stay prepared in case of a denial.
Financial consequences
A denied claim can negatively impact a policyholder's financial situation. Without a payout, drivers may have to cover repair costs, medical expenses, or other losses out of pocket. This can be especially challenging for those without sufficient savings or additional coverage. Talking to an insurance agent about your existing coverage and understanding what your policy covers can help dodge financial consequences.
Stress and inconvenience
Beyond the financial impact, a claim denial can cause stress and inconvenience for the driver, or anyone affected. Disputing a denial, gathering additional evidence, and communicating with the insurer can also be a time-consuming and frustrating process. Becoming familiar with what accidents your insurance policy can cover may help relieve stress when filing a claim.
Common reasons for car insurance claim denials
You had an accident on the road and filed a claim, but you’re not getting the financial result you were looking for. There are many common reasons why an auto insurance claim may be denied. Drivers familiarized with the claim filing process can help with receiving better outcomes.
Inaccurate details in the claim
Providing incorrect or incomplete information on a claim form can lead to a claim denial. An insurer relies on accurate details to assess a claim properly, so inaccurate details may limit your coverage. A driver’s job after an accident is to give solid information to the best of their ability.
A denial may also happen if a policyholder doesn’t oblige to certain claim requirements. Your insurance adjuster may point out what’s wrong in your initial claim, like incorrect addresses or unclear photos. Review the initial claim multiple times and that necessary and accurate documents are attached.
Policy coverage issues
Another common reason your auto insurance claim might be denied is the coverage purchased. This can include insufficient coverage, maximum payout limits, or policy exclusions.
Insurance policies often contain specific exclusions that outline situations where coverage does not apply. For example, damage caused by a natural disaster, wear and tear, or use of an insured vehicle for commercial purposes may not be covered under your personal auto policy. Understanding these exclusions is essential to help avoid any surprises when filing a claim.
Common exclusions can also include damages resulting from illegal activities, intentional acts, and using the vehicle for purposes not disclosed to the insurer. For instance, if a driver uses their car for ride-sharing services without notifying the insurer, a claim for an accident during such a trip may be denied.
A policy coverage issue may come from dealing with an uninsured motorist. If an uninsured driver collides with you, the damage to your car may not be covered. Having uninsured motorist coverage can help you avoid financial distress when encountering an underinsured or uninsured driver.
Late reporting of the claim
Time is a significant factor when filing a claim after an accident. Insurance policies may limit when a driver can report a loss, so understanding your coverage’s guidelines can aid in a claim’s submission. It's crucial to know your policy’s timeframes and act promptly after an accident to help receive the coverage you’re looking for.
Non-disclosure or misrepresentation
When you file a claim, relevant information about yourself and the accident may be requested. Withholding or misrepresenting details during this process can result in an undesirable conclusion.
What does misrepresentation in an auto insurance claim look like? Possible examples can include intentionally concealing or fabricating parts of an accident or making false statements. Being dishonest about the situation typically won’t help you or your insurance company figure out how to cover the damages adequately. Try to represent the accident to the best of your ability to aid in your claim’s success.
Lack of proper coverage
It’s common for policyholders to misunderstand the coverage they’ve purchased, which can lead to confusion during the claim process. Unfortunately, having insufficient coverage during an accident may result in a denial.
Researching different policy options and adding layers of coverage may help avoid insufficient insurance issues. Drivers may look into a full coverage policy, which can improve your situation during an accident or loss. Full coverage can include liability, collision, and comprehensive coverage, which may assist you through a covered accident or non-collision incident.
Regardless of your coverage, reviewing your policy’s details is important to help navigate specific automotive risks.
Violation of policy terms and conditions
A common reason for a claim denial is that a driver violated the terms and conditions of their coverage. Depending on the state you live in, a coverage violation may include:
- Driving under the influence: If the policyholder is driving under the influence of alcohol or drugs at the time of the incident, your coverage may not apply.
- Unauthorized driving: If an unauthorized driver was operating the vehicle during an incident, coverage can be voided.
- Fraudulent claims: A fake or misrepresented claim, like exaggerating damages or staging an accident, can violate your policy’s terms.
What to do when a car insurer denies a claim
So, you used some available tips to submit a proper auto insurance claim, but your claim still gets denied. After this rejection, you can take several steps to see if you can reverse the denial.
Following a claim denial, your insurance adjuster may provide an explanation through a denial letter. Reviewing the denial’s reasons can be a crucial first step in determining your next course of action.
A denial letter may give drivers important details about the claim’s rejection, such as misinformation, lack of coverage, or violating a policy’s conditions. Carefully review each detail so that you can understand what was missing in your initial submission.
If you believe the denial was unfair, you can gather additional evidence to support your claim. This may include photos, witness statements, or further documentation that justifies your claim for coverage. Presenting a solid case can increase the chances of reversing the denial.
Getting clarification on an insurance claim denial can be another effective way to seek reversal of the insurance company’s decision. You can contact your insurance company and ask them to review the claim’s issues. If you have general questions about insurance claims, you can contact Infinity Insurance Agency, Inc. at 1-855-478-3705 to discuss them with an experienced agent.