What to Do if a Car Insurance Company Denies Your Claim

If you’ve been in an accident and had problems with your insurance afterward, you may be wondering what to do when car insurance denies your claim. This unfortunate circumstance may happen for a variety of reasons, but shouldn’t be the cause of despair. It is possible to appeal a denied claim, either with or without the help of legal counsel, and doing so could result in a better outcome for you. In this guide, we review what you can do to potentially avoid a denial and how to handle one when it happens.

What’s a claim denial letter?

After you file a claim with your auto insurance company, an insurance adjuster will be responsible for documenting the details of the accident. After analyzing the facts provided, the adjuster will determine whether or not the car insurance claim will be denied or accepted. If the accident is deemed not covered by your auto insurance policy, the insurance company will send you a formal letter stating what factors led to the decision.

A denied car insurance claim doesn’t necessarily mean the end of the claims process. If you do not agree with your insurer’s claim denial, you have the right to appeal the insurance company’s decision. If your insurance denies a claim, the reason for the denial will influence how you should go about the appeals process.

Why did my car insurance company deny my claim?

There’s no single yes or no answer to the question, can insurance deny a claim? The unique factors present in every situation will affect whether or not your insurer approves or denies your claim—and whether or not that denial is upheld.

Elements such as the contents of the police report, eyewitness statements and more can all play a role. In some cases, a claim could be denied because premiums weren’t paid on time or because the policyholder wasn’t truthful in their claim application. It’s also possible that your policy doesn’t cover the situation for which you made a claim.

If you receive a denial letter, read it carefully, as it will typically include supporting evidence for the decision. Some common reasons a claim is denied include the following:

• Lapsed insurance policy
  

  Failure to pay your insurance premium on time can result in a lapse in coverage, meaning you don’t have an active policy to file your claim against. Paying your auto and home insurance premiums on time is the best way to ensure coverage is in force when you have to file a claim. Whether you pay the policy term in full or use auto-pay to prevent missed payments, avoiding a lapse in coverage is crucial. In addition to the likelihood of your claim being denied, a lapse in coverage could also result in fines and other penalties, such as a suspension of your driver’s license and vehicle registration, depending on your state.

• Policy exclusions
  

  When you purchase car insurance, pay attention to the coverage types you choose and what they provide financial protection for. For example, you may have an older car and feel comprehensive and collision coverage is not needed. However, if your car is stolen or you cause an accident, the insurance company will not be able to assist without the proper coverage.

  When reviewing your claim, the adjuster can see your policy’s inclusions. Filing a claim for damage that you either lack coverage for or that is specifically excluded will result in a claims denial letter being sent by your insurer.

• Not enough coverage
  

  It can be tempting to choose state minimum liability limits to keep the cost of car insurance low. While you may save on your premium, if you are involved in an accident with several injuries to others or hit an expensive car or building, you may exhaust your liability limits and be vulnerable to a devastating financial loss. For example, say you have $25,000 in property damage liability coverage but you total a car worth $40,000. The auto insurance company can pay up to the $25,000 allotted, but deny the remaining $15,000, which could leave you vulnerable to a lawsuit for the remaining amount.

• Accident involving an uninsured motorist
  

  While most states require liability coverage, not all require uninsured motorist coverage. If someone causes an accident with you, provides false insurance information or does a hit-and-run, finding proper insurance details may be difficult or impossible. If you do not carry uninsured or underinsured motorist coverage, your claim could be denied.

• At-fault driver’s insurance denied your claim
  

  If the at-fault driver’s insurance denied the claim, there could be several reasons why. Examples of why the at-fault driver’s insurance may have denied a claim include providing incorrect insurance details or not having enough or the right coverage. Additionally, if an accident occurs in a no-fault state, you are responsible for paying for your medical expenses up to your policy’s limits.

How do I avoid a car insurance claim denial?

The best way to avoid having to deal with a claim denial is to do what you can to ensure that there isn’t one. But how? There are several strategies you can try to make it less likely you’ll find yourself with a denied claim.

First of all, take the time to read and understand your policy. Know your coverage limits, and make sure you are aware of any exclusions. Ask an agent if you’re uncertain about anything in your policy. If you do not have uninsured motorist coverage, for example, be aware that you could face out-of-pocket costs if you’re in an accident with one of the roughly 14 percent of U.S. drivers who are on the road illegally without coverage. In addition, pay your premiums on time to ensure that you do not have any lapses in coverage.

If you are in an accident, start to collect information as soon as possible. If you are unhurt and there are witnesses, be sure to take down their contact information. Take as many photos as you can from different angles of the vehicles and their surroundings. Cooperate with the police and first responders, and ask for a copy of the police report to submit with your claim.

Always be honest and transparent when dealing with your insurer, both when you purchase your policy and in any claims communications after an accident. Any misrepresentation or exaggeration on your part could be a reason for a denial.

Finally, avoid reckless and negligent driving, and never get behind the wheel when you have been drinking. In addition to leading to a claims denial, these behaviors could also leave you liable for civil penalties or even jail time.

What to do when car insurance denies your claim

You can appeal the decision if you feel an error has been made in the car insurance company’s claim denial. Most insurance companies have a process in place for you to contest a denied claim. Here’s what to do when car insurance denies your claim, including the steps to take if you want to appeal an auto insurance claim decision on your own:

1. Gather evidence: Review any documentation provided by the insurance company and gather the evidence you need to appeal. This could include police reports, eyewitness information, photographs, medical reports and other supporting evidence. Make copies of everything to provide to the insurance company so you can keep the originals.
2. Draft an appeal letter: This letter will spell out why you do not agree with the insurance company’s decision. Make sure you explain why each piece of information was provided in step one, such as any police reports. Provide as much detail as possible, referencing policy information and the claims denial letter as needed.
3. Consider hiring an attorney: If you are not comfortable taking these steps or want an expert’s opinion, it may be a good idea to hire an attorney. They can review the case and supporting documents to draft a demand letter requiring the insurance company to respond and defend its claim denial. While it may cost you money upfront, it could be a worthwhile expense to have the claim denial overturned if you feel your insurer made the wrong decision.

Understanding the claim denial letter and why an auto insurance company decided not to make a payout is the first step in determining the validity of a denied car insurance claim. Most instances of auto claims denials are valid, although others may not be. In this case, appealing the insurance company’s decision can get the decision reversed or an offer made to cover the damages.

Learn more: Compare car insurance quotes

Real examples of people who’ve had claims denied

If you are facing a claim denial, it may be helpful to know that you’re not alone. We looked at popular forum website Reddit to see what others are saying about their claim denials. Some comments spoke to the need for accuracy when reporting the accident, while others noted the importance of understanding the limits and exclusions that may apply to your coverage. The following examples are typical of what readers reported.

*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.

Frequently asked questions

• Do I need a lawyer to draft an insurance claim appeal letter?
  

  No, you are not required to have legal help when you appeal a claim—but it could be helpful in some cases. If you are willing to pay for a lawyer, they can help you go through the facts of the accident and craft a solid letter that may carry more weight with the insurance company. Having said that, if you wish to handle the situation on your own, there is no reason not to. When drafting your letter, just be sure to stick to the facts, avoid any emotional appeal and take the time to be thorough in describing what happened.

• Will appealing a car insurance claim increase my premium?
  

  The act of appealing a claim should not cause your insurance premiums to increase. But if your appeal results in an approved claim, you may see your premium increase at renewal. In general, the more high-risk your insurance provider deems you to be, the higher your premium will be. If you are involved in an accident, regardless of whether or not you were found at-fault, the statistics show that you are more likely to be involved in another one. This makes you riskier for your provider to insure.

• What is the best car insurance company?
  

  The best car insurance provider depends on your unique insurance needs and personal characteristics. Location, vehicle type, coverage needs and other factors all play important roles in deciding which provider to go with. Most insurance experts recommend that you compare at least three car insurance quotes from multiple insurance companies (for the same types and amounts of coverage) to determine which company is right for you.

• How many times can I appeal a car insurance claim denial?
  

  Restrictions on the number of times that you can appeal a car insurance claim denial will vary by carrier and state. Most states have a statute of limitations for appealing a decision rather than a limit on the number of times that you can appeal. You may be able to appeal to your insurance company multiple times based on the evidence you provide. If the outcome is not satisfactory, you can consider contacting a public adjuster to advocate on your behalf or file a complaint with your state’s insurance department to act as an intermediary for the dispute.