What To Do After Your Claim Has Been Denied
If you have to file an auto insurance claim, then something's already gone wrong. If your auto insurance claim is denied, that's just one bad thing on top of another. If you need to know what to do after your claim was denied, you've come to the right place. If your car insurance denied your claim or if the other party's insurance denied the claim, your options are the same. You can either appeal the claim denial and work with an auto insurance adjuster to have the claim reconsidered or you can accept the decision and your financial responsibility.
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UPDATED: Sep 3, 2020
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So you've been involved in an accident. Even if you did everything right — got the other driver's information, called the police, filed a report, dotted your i's and cross your t's — your insurance company may still deny your claim. As if getting into the accident in the first place wasn't bad enough!
No matter what auto insurance coverage options you've selected, a claim denial can cost you a lot. Luckily, a denial isn't the end.
Read on to learn what to do if your claim is denied and if you need to shop for a new auto insurance policy, use our FREE comparison tool to find multiple auto insurance quotes near you.
What To Do After Your Claim is Denied
After your claim is denied, you basically have one of two options:
- Give up, and try to deal with the financial burden of repairing/replacing your vehicle all on your own so that you can get your life back to normal, or
- Dispute the claim with your insurance company
Option number two is the definition of "easier said than done". But it's not completely hopeless. Here, we'll explain the steps you can take in order to make sure your claim is not denied in the first place. But if it is, we have some helpful advice for you with regard to the claims resolution process. Hopefully, after reading this article, you and your insurer will be able to come to a resolution that benefits everyone.
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Avoiding a Claim Dispute
"Prevention is always the best medicine" is a platitude that is just as true outside of the medical industry as well as it is within. If you do everything you can to prevent your claim from being disputed in the first place, it will significantly help you in the event that your claim is unfortunately denied. Here's a checklist you should follow in the event that you get into an accident:
- Documentation, documentation, documentation. Get as much documentation as you possibly can. Whether this comes from the other driver immediately after the accident, any police officers who arrived on scene, any medical expenses that result from the accident, or any paperwork from the other party's insurance company. The more proof you have, the easier it will be to make your case.
- You'll catch more flies with honey than you will with vinegar. We understand that getting into an accident, and all of the red tape that follows, means that you'll be going through a lot of stress during the process. But try to be as polite and as level-headed as you can, especially when you're interacting with claims adjusters. These individuals are usually overworked and pressed for time, in addition to carrying a large caseload. But if you make your interaction with them a pleasant experience, they may be more likely — even if only subconsciously - to process your case in a quick and efficient manner that falls in your favor.
- First-party vs. Third-party claims. Where it is legally permissible, try as hard as you can to make as many first-party (and a few third-party) claims as possible. Because first-party claims are between you and your insurance provider, they have a vested interest in keeping you happy so that you don't switch companies. A third-party claim — filed against the other driver's insurance company — is a whole other ball game. They are interested in making the claims process as difficult for you as possible so that they can pay out as little as possible. Third-party claims are a vicious, uphill battle that you'll have to be armed to the teeth for if you want to win.
- If all else fails, your claim is denied, and you feel that this denial was either unfair or illegal, you have every right to report the incident to your state's Department of Insurance. Some states may even have a special department dedicated to claims resolution. You should contact them immediately after you receive notice of your denied claim in order to ensure the most favorable outcome for yourself.
Understanding Why Your Claim Was Denied
One thing many drivers do not understand about the claims process is the fact that your insurance company does not have to pay out every single claim you file. There are limits to how much you can file a claim based on the coverage you purchase (or don't purchase). If the claim you file is substantially more costly than the coverage you have, if your claim hits or exceeds your existing coverage limits, or if you have not bought the particular type of coverage you're filing a claim for, your claim can be denied and there's not much you can do about it.
This is why it's important to purchase as much coverage as you can possibly afford, both in dollar amount and in type. For example, if you don't have Comprehensive coverage on a car that gets stolen, you're going to be paying for a brand new car out of pocket. Below is a chart that clearly outlines your long-term savings from purchasing insufficient coverage:
|Bare Minimum Coverage||Comprehensive Coverage||10 Year Savings|
Versus having to replace your stolen vehicle:
The estimates in the graph above aren't necessarily organized by state, but rather by best-case scenario. And as you can see, no matter how much you save in the short-term by purchasing less coverage than you need, you're going to take a huge financial hit - all at once - if anything should happen to your vehicle that is outside the available coverage of your policy.
The same rule applies to mandatory state minimum coverages, such as liability, as well as optional coverage such as Collision or Medical Payments. If you cause more financial damage than the coverage limits of your policy will pay out, and you are found at fault in the accident, the other person's insurance company and anyone who is deemed not at fault in the accident can sue you for damages. Those costs will also come directly out of your pocket.
Unusual Reasons for Denying Your Claim
Another reason your claim may be denied — and here's where things get exceptionally tricky for people who are trying to prove that their claim is valid — has to do with whether or not you are violating a state law when the accident occurred.
Certain legal situations, such as getting a DUI, driving without a valid driver's license, or driving without auto insurance coverage at the time the accident occurred could all very easily invalidate your claim in your insurance company's eyes. Furthermore, in some states, your insurance company may have the legal authority to deny your claim if they feel that your particular accident should have been "avoidable". Obviously, this is extremely subjective, Which further emphasizes the need for extensive and detailed documentation.
In reality, there are a great number of random reasons why your insurance company could declare your claim invalid and put all of the financial responsibility on your shoulders. For some companies, even if it's just a tiny fender-bender and you happen to be blocking traffic by staying at the scene of the accident, moving your vehicles and waiting to call the police could invalidate your claim.
If you happen to get injured in an accident, failing to seek immediate medical attention could make your insurance company suspicious about whether or not your medical costs as a result of an accident. This is why it's important to make sure your report and start documenting the details of your accident as quickly and as thoroughly as possible.
The other miscellaneous cause of denied claims is misrepresentation - either by you, or your insurance company. It's tempting to give your potential insurer less than accurate information when collecting quotes, hoping they won't have the resources to confirm whether the information you gave them is accurate.
Even if this saves you money on premiums in the short-term, it's not worth the risk of having a claim denied or having your coverage canceled unexpectedly once the truth comes out. And if your insurance company misrepresents themselves in any way, such as by operating across state borders in markets where they're not legally authorized, your claim can also be denied.
If you really want to make sure you don't have to deal with problems stemming from denied claims, it's best to put in the time and effort to research the best companies before you decide on an insurance policy. Shopping around for the best price on a quote is a good start — but getting helpful information on an insurance company's financial strength, customer service, and their track record for paying out claims can be equally as important.
To compare quotes for auto insurance, use our FREE search tool to see multiple quotes right now.