You probably hope you won’t ever have an accident and need to make a claim when you purchase auto insurance. But you expect that your insurance will pay up if you ever need to file one. Unfortunately, insurance companies occasionally reject policyholders’ claims, frequently for valid reasons but occasionally not. It’s important to understand the main causes of claim denial.
These are the most often stated reasons given by insurers for denying claims or paying less than the entire amount, according to claims adjusters, who evaluate insurance claims for a job.
Every insurance includes a cap on how much it will reimburse in the event of an accident; if your claim exceeds these limits, you may be required to pay the excess.
Your property damage liability policy, which pays out if you wreck someone else’s car or other property, can have a $10,000 cap, for instance. That might be sufficient in some circumstances but problematic, let’s say, if you rear-end a $400,000 Lamborghini. States mandate liability coverage minimums, such as $10,000 or $25,000, although you can pay more to choose a greater amount.
Your deductible, or the amount you must contribute personally to a claim before your insurance begins to pay, will also have an impact on how much money you are likely to recover. For instance, if your deductible is $500, you are responsible for paying the first $500, not the insurer.
The bigger your deductible, the less you’ll pay in insurance premiums annually, but the greater the financial burden in the event of an accident.
Numerous different types of coverage are included in an auto policy. Among these are comprehensive coverage, collision coverage (which compensates for damage coming from a collision with another vehicle or if you hit anything like a light pole), and property damage liability (which covers damage from other causes, such as fire or vandalism). Your state might require certain types of coverage while making others optional. For instance, you won’t be protected if your automobile is stolen if you choose to simply have limited liability coverage.
Violates the Law
If you were breaking a state law when the accident occurred, your insurer may reject your claim even if you have the correct kinds of coverage and enough of it. Driving without a permit would be one instance of such. Another is if you were drunk while operating a vehicle.
Additionally, an insurer has the right to reject a claim if it is deemed to be fraudulent or if you could have prevented the accident. Among the warning signs that insurers regularly look out for are:
- Not informing the police or your insurer right after an accident.
- Not getting any necessary medical care right away after the accident. This could raise concerns that you are making a claim for injuries that weren’t caused by the collision.
- Giving inaccurate information when you bought the insurance, which the insurer might discover while looking into your claim.