What If My Auto Insurance Claim is Denied?
Having your auto insurance claim denied is the last thing you want to have happen after being involved in an accident. Whether your incident was a fender bender or something more severe, finding out you're not covered can be devastating if you believe you deserve to be compensated. Make sure you get the benefits you pay for by understanding the common reasons insurance companies deny claims and what you can do if you think you've been treated unfairly.
Understanding the Claim Process: Traditional Liability vs. No-Fault
Your auto insurance claim starts with an accident or collision. The type of incident that occurred, the damage that resulted, who's involved, and who's at fault all determine the type of benefits you'll receive and who pays them.
Your compensation also depends on the state where you live. Auto insurance laws vary widely because state insurance commissioners regulate the industries in their individual states. Knowing whether you live in a state that has traditional liability versus no-fault insurance
Traditional liability is much more common and easier to understand.
With this type of insurance, benefits are paid to the victim of an accident by the policy of the at-fault driver.
If you cause an accident, your policy will pay medical expenses and property damage costs to
It's important to understand that the basic coverage levels of traditional liability are only designed to cover damage that a driver has caused
No-fault insurance, on the other hand, is a little bit more complicated.
These types of plans attempt to limit lawsuits for minor injuries by settling claims through your own insurance, regardless of who caused the accident.
If you or your passengers get hurt, your own policy will cover your medical fees up to a certain point. However, if the other driver's at fault and your injuries are severe or your medical expenses are high, you might still be able to sue if your case meets certain requirements of your state.
Note that no-fault insurance doesn't apply to property damage. If you cause an accident, you could still be held accountable for claims to repair or replace someone else's car or other types of property. If you're at fault—or something else is at fault, such as weather or a natural disaster—your own insurance will cover your repairs if you have the right additional policies on your plan.
No-fault insurance only applies to you if you live in:
- New Jersey
- New York
- North Dakota
- Puerto Rico
Common Reasons for Claim Denial
After you file an auto insurance claim, the company assigns an adjustor to oversee the claim. The adjuster then compiles the available facts and documentation to determine the level of damage, which driver was at fault, and the company's responsibility for the claim.
If you believe you have a right to compensation, you expect your claim to be approved and reimbursement to be timely and fair. Unfortunately, that's not always the case. You could receive a denial from your insurance company or the policy of the driver who caused the accident. If this happens, you'll receive a notice explaining the reason for your denial. There are many reasons your claim could be rejected, but certain ones are more common than others.
What to Do If Your Claim Is Denied
According to data analytics provider Verisk, U.S. auto insurance companies lose around $3.4 billion a year in fraud related to violations and accidents. For that reason, companies work hard to ensure they're not duped into paying for false claims. Sometimes, this vigilance results in a mistaken denial for legitimate claims. In other cases, the insurance company might be trying to save money with unethical practices.
If you believe your claim has been unfairly denied for any reason, you have several options to get the benefits you deserve.