When Your Auto Insurance Claim is Denied

many reasons, valid or otherwise. If your insurance company won’t pay, take note of the reason(s) given in the their denial letter. Then take out your insurance policy and read it. The denial could be an error based on a lack of complete information or misinformation. But it could also be correct and written in the proverbial “fine print” of your policy.
Some of the frequently noted reasons for denial are:
You have no insurance for the claim presented. For example, if you drive an older vehicle, you may carry only liability insurance and have no collision coverage because it is costly. A claim under your policy for damage to your vehicle will correctly be denied.
You do not qualify as a named insured under the policy. For example, you are a teenager and you are specifically excluded under your parents’ policy because your parents do not expect you to drive their vehicle.
Your coverage has lapsed because you failed to pay your premium before the end of the grace period.
You made an Uninsured Motorist Claim under your policy and it turns out the other party to the accident was insured.
The damage claimed exceeds your policy limits and the insurance company will not cover the excess.
You bought a new car and failed to notify the insurance company to add it to the policy within the specified time given in the policy.
If, after reading the insurance company’s reasons and reviewing your policy, you still believe coverage has been wrongfully denied, there are some steps you may take to try to remedy the situation. You have certain rights under your policy and under state law. Your insurance company has a duty to fairly and promptly settle your claim in good faith.
Steps you can take if coverage has been wrongfully denied:
Write back to the insurance company to tell them where their mistake is and provide them with documentation to support your response.
Appeal the company’s decision to your state’s Insurance Commissioner.
Hire an attorney to discuss the error with the insurance company.
Sue the insurance company for bad faith, breach of contract, and/or violations of your state’s insurance code.
If the insurance company realizes its mistake, or you are correct in that the adjuster made an error, they will reopen your claim and move forward with their investigation. Where you don’t understand their reason for denial, ask for clarification. It would be wise to consult an attorney to make sure they are not erroneously denying your claim.
Note, that if your claim is with the insurance company for the other driver involved in the car accident, a failure to settle promptly or fairly is not a denial of the claim. You should contact an attorney to either negotiate a settlement for you or to file suit against the responsible driver. Under some circumstances and in some states, you may also file suit or file a complaint with the State’s Department of Insurance for Third Party Bad Faith. Seek advice from an attorney to see if yours is one of those states.