9 Reasons Why Car Insurance Claims Are Denied

News » 9 Reasons Why Car Insurance Claims Are Denied

When a person is involved in a car accident, insurance companies are supposed to pay out for vehicle damages, medical bills, rental cars, and any other related expenses. 

However, there are some instances in which the insurance company denies claims to the driver, forcing them to pay out the costs of the accident themselves. 

Car insurance claim denial can be frustrating and difficult for people involved in accidents, adding an enormous stress to an already overwhelming situation. It’s important to learn how to negotiate personal injury claims with your insurance company in order to receive the best compensation possible for your car accident insurance claim, but it should also be understood why insurance companies may deny a claim. 

In this blog, we discuss 9 reasons why car insurance claims are denied and how you can fight back against an insurance claim denial.

Why Do Insurance Companies Deny Claims?

Insurance companies will deny claims for a variety of reasons. Many of the reasons behind an insurance company's decision to deny claims are valid and baked into an insurance policy. Other reasons may indicate that an insurance company is only trying to minimize their costs while knowing they are obligated to pay out and have wrongly denied a claim.

In the blog bellow, we’ll only be going over the valid reasons an insurance company will deny a claim, but it is vital to mention that if you’re wrongly denied a car insurance claim, a personal injury lawyer can help remedy the situation and negotiate with the at-fault party’s insurance company on your behalf. 

Here are 9 reasons that car insurance companies deny claims:

Wholly or Partially At Fault

If a driver is at fault for an accident, their insurer will likely not cover the damages. Major infractions, such as driving drunk will likely void any insurance coverage. 

Other reasons an insurance company can hold the driver liable include driving without a valid driver’s license, breaking road laws, texting while driving, and more. Contacting a lawyer in this case, who is an expert in car accident lawsuits, will be beneficial to the driver. 

If a driver is only partially at fault for an accident, and it is documented as such in the official police report, insurance claims can be tricky. It’s also recommended to contact an attorney with experience in auto insurance claims to discuss your legal options.

The Insurance Policy Has Lapsed or Been Canceled

If a driver does not keep up with their car insurance policy payments, their insurance coverage will lapse and they will no longer be covered. This can happen in a variety of ways, such as if a driver moves and doesn’t update their address, they forget to make payments, or their payment information is out-of-date, among other things. 

If a driver’s auto insurance policy has lapsed, the driver will likely have to pay for damages out of pocket. 

Undiagnosed Injury

If a person who has been in a car accident does not have a diagnosis for their injuries, or if injuries appear later, it can be difficult to prove that those injuries are related to the accident. 

Car insurance companies and health insurance companies may try to argue that the driver’s injuries are pre-existing or unrelated to the car accident, making it difficult to obtain compensation or an insurance payout. 

Insurance companies may also refer to a police report that states a driver was not injured at the scene to deny a claim. It’s important that drivers avoid stating they have no injuries at the scene of an accident to avoid this situation. Even if you believe you’re uninjured at the scene of an accident, you should seek a medical evaluation afterward to both make sure you’re in the clear and to also have documentation that you sought medical treatment. 

Health or Car Insurance Claim is Greater Than Coverage Allows

If a driver’s damages from a car accident are greater than what their policy allows, an insurance company will not be liable to pay for all of it. 

Oftentimes, car accidents will result in damages that reach far beyond one’s expectations, not only medical expenses and property damage costs. Lost income, mental and physical therapy, transportation costs, and more can add up and may not be included in an insurance policy. 

It’s important that drivers understand their policy limits and are aware of how much an insurance company will pay if they get into a catastrophic accident. 

Dispute Over Liability

If an insurance company and driver do not agree on who is at fault for a car accident, a dispute over liability can arise. This can be a problem if a driver only has liability coverage as they will likely have to pay for damages out of their own pocket. 

If this is the case, the driver could benefit from hiring an auto accident lawyer in order to help with the insurance claim. 

To bolster one’s chances of winning a liability dispute in an insurance claim, it’s recommended to get a copy of the police report that was produced at the scene of the accident so that you can determine who was listed as at fault and proceed with that information in mind. 

Failure to Notify Insurance Company in a Timely Manner

If a driver is in an accident, they must notify their insurance company in a timely manner. Failure to do so could jeopardize their chances of a successful claim. 

Contact the insurance company as soon as possible so they can begin their investigation and you can attain the payout you rightfully deserve. Too often, people will wait until after their mental and physical recovery to file a claim. 

Most insurers allow 30 days to report an accident, but some enforce a smaller window of time and others allow longer periods to file. Be sure to read over your policy and understand when you’re allowed to file a claim. 

Damages Aren’t Covered in the Insurance Policy

If a driver’s damages are not covered in their policy, the insurance company is not liable to pay out. 

Certain, unexpected damages can occur after a car accident that are not written into some insurance policies. Though one’s medical bills can be covered by insurance, other damages like lost income or earning ability, “out-of-network” medical care, therapy costs, and more are often left up to the victim to pay out-of-pocket. 

Providing Incorrect Insurance Details or Information

If a driver does not provide accurate information or as much detail as is necessary on their car accident claim, their claim will likely be denied. 

Even if the false information provided was a simple mistake, the insurance claim could still be denied. Insurance companies expect inquiries to be extremely serious and completed with diligence. Any indication that a claimant provided inaccurate information may result in a claims denial.  

Filing a Fraudulent Claim

Filing a fraudulent claim is a sure-fire way to get an insurance claim denied. 

Fraudulent information in an insurance claim can include: lying about damages, faking injuries, trying to collect insurance payouts for pre-existing conditions or injuries, and more will almost certainly result in a denial. Filing a fraudulent claim could also open the possibility of the insurance company canceling a policy or issuing fines for differences in the application and actual costs. 

Contact a lawyer who understands the ins-and-outs of car insurance claims to make sure you don’t file a fraudulent claim, leaving you to pay out-of-pocket for the expenses related to your car accident. 

How Does a Car Insurance Company Handle Accident Injuries?

Typically, your own car insurance company will pay for the immediate treatment of car accident injuries until the maximum amount of coverage is reached. Then, health insurance will pay for what is left uncovered by car insurance. 

Your own car insurance and health insurance will typically cover the expenses of your injuries and property damage. If another driver is found to be at fault for the accident, their insurance will reimburse your insurance’s costs. 

It’s often misunderstood that another driver’s insurance company will immediately pay for your injuries and property damage. The process for filing claims and sorting out liability take longer than the immediate need for medical care, so your insurance will cover (or attempt to cover) your costs, then deliberate with the at-fault party’s insurance company to reimburse your medical expenses and property damage.

What To Do If Your Insurance Claim is Denied

If an insurance company denies your claim or an insurance company refuses to pay out, you might be wondering how you can get the compensation you deserve. You will receive a claims denial letter in the mail that will outline why a claim was denied and what factors went into the decision. 

If you're dealing with a claim denial, you should consider filing an appeal for the claim denial.

In the appeal process, you can produce supporting evidence to validate your claim, such as police reports, accident reports, witness information, medical reports, repair estimates and more. Along with copies of evidence, you should write an appeal demand letter that spells out why your claim denial was wrong and why you deserve an insurance payout.

During this process, it may help to contact personal injury law firms and see if an auto accident lawyer can help.

What is a Bad Faith Insurance Claim? 

If your claim was denied unreasonably or benefits that are afforded within your policy were withheld, your claim denial could fall under Bad Faith law. 

Bad faith laws vary by state, but generally an insurer is expected to act in good faith and honesty when dealing with claims. According to Insurance Coverage Litigation, the conduct undertaken by insurance companies in which bad faith lawsuits arise include:

  • Misrepresentations by the insurer of the coverage the policy provides
  • Sploitation of evidence (rendering potential evidence invalid through alteration, destruction or loss)
  • Obtaining confidential information that can be used to avoid coverage for the claim 
  • Negotiating with claimants to plead the complaint so that the action falls outside of coverage
  • Overpayment on claims to accelerate exhaustion of policy limits

Insurance bad faith lawsuits aim to hold insurance companies to a standard when dealing with claimants. With compensatory and punitive damages being relatively high in an average insurance bad faith lawsuit, insurance companies should be persuaded to not act unethically.

If you believe your insurance benefits are being withheld unethically, or your claim has been wrongly denied, consider contacting an experienced attorney. Most attorneys that work in this field operate on a contingency fee basis, meaning that they do not charge for legal services unless compensation is won.

Hiring a Car Accident Lawyer

The insurance claims process can be confusing and overwhelming, especially for people who have just recently been through a traumatic car accident. On top of that, having an insurance claim denied can make it feel like you have no path forward to financial remediation.

Car accident lawyers can help walk victims through the process of filing insurance claims and dealing with companies as they’re recovering from the trauma and injuries. You can also have a lawyer talk to an insurance company, insurance agent or insurance adjuster on your behalf.

Car accident and personal injury lawyers are well-versed in the process of insurance claims and will make sure that you are compensated and made financially whole after an accident. 

How Can Personal Injury Lawyers Help?

An experienced personal injury lawyer will also be able to recover damages that might not be covered by your insurance company such as:

  • Lost wages or earning capacity
  • Transportation/rental car costs
  • Mental anguish and emotional damages
  • Pain and Suffering
  • Other punitive or compensatory damages that are often overlooked by insurance companies. 

If you’ve been in a car accident, consider contacting a personal injury lawyer for advice on your claim and to discuss the potential for legal action regarding your damages. 

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