When you are in an accident, the last thing you want to worry about is whether or not your insurance company will pay for your claim. Unfortunately, that is a very real concern and it is possible that your claim will be denied. Insurance companies have a vested interest in denying claims. The only way they make money is by getting more money from you than what they have to pay you. For this reason, many policies are created with safeguards to protect the insurance company from needing to pay you for accidents. Some common reasons for the denial are:
Not understanding policy coverage
If you don’t understand what your policy covers, it’s likely that you may submit a claim for something not covered in your policy. Unfortunately, it is common for people to get the cheapest coverage possible that meets the laws related to needing car insurance. However, the cheapest coverage often doesn’t cover very much when it comes to paying for car damage. With some insurance policies, you may only be covered if you reported an injury at the accident and sought help from a doctor, for example. With these types of policies, fender benders or accidents that prevent your car from working properly like broken windows, would not be covered.
Not reporting the accident in time
Most policies have a time restriction that requires you to report the accident within a couple of days. However, if you miss that window, whether that’s because you were in the hospital or just busy trying to take care of other things like missed work, then you may miss out on insurance coverage. There are some policies and cases that provide leeway for those in a hospital, however, that is typically outlined in the policy. It is ideal that you review your policy when you get it so that you know what to expect and can ask for help from loved ones or an attorney if you are unable to process everything within their timeline.
Insurance Premiums Weren’t Paid
One of the most common reasons why car insurance companies deny claims is because an insurance premium was not paid. Most car insurance in the United States is a pay-as-you-go system: each policy period, you pay a new premium. You can make one large payment to pay the policy in full, but most people instead pay a down payment to activate the policy. After you purchase your policy, you are required to continue to pay monthly premiums. If those payments are missed, then the company will stop covering your vehicle and no longer have any obligation to cover accidents.
The Driver is Excluded
Insurance companies exclude drivers for a variety of reasons. Sometimes it’s simply that the policyholder doesn’t allow the other person to drive their vehicle and doesn’t want to pay the additional premium to cover them. As a result, insurance companies often include a clause that excludes that driver from coverage. This means if the excluded driver causes an accident, your insurance company will not pay for the damages caused by your car.
The Accident Was the Result of Criminal Activity
If the accident is the result of criminal activity, you may not be able to make a claim. Insurance companies are notoriously strict about this rule. If you or the other driver were intoxicated by alcohol or drugs, there is a good chance that your insurance company will deny your claim.
This can also apply to car accident claims caused by activities such as high-speed chases, using the vehicle in the commission of a crime (such as being the getaway driver), and other criminal activities.
Fraud Was Committed During the Application Process
There are also instances where a person knowingly commits fraud during the application process. This could be for a number of reasons: to get lower rates, to avoid being identified as a driver who has had a claim before, or to hide the fact that they have an expensive vehicle.
Fraud is committed when you knowingly provide false information in your application for an insurance policy. You could commit this fraud by lying about your driving habits or if you list an old car as the vehicle that you drive because it would be cheaper on the policy.
One of the most common reasons that people commit fraud is when they are trying to get lower rates on their insurance. Let’s say you give your address as one that is less than 100 yards from a fire station and your annual premium will go down by almost $100 per year. That is fraud. If they find out, they can raise your rates and deny future claims.
No matter how careful we are, sometimes accidents happen. But if you’re in the unfortunate position of filing an auto insurance claim and find out that it was denied, don’t panic. There are a number of reasons that your claim may be denied, and many of them can be addressed early on to help you get the claim approved. The first step is to contact the insurance company and find out why your auto insurance claim was denied. There are many different reasons for a denial of an auto insurance claims, but this will help you figure out where to focus on next in order to get the most coverage from your insurer possible.