Imagine it’s an ordinary Friday afternoon, and you’re driving home from the grocery store, minding your own business. All of a sudden, another vehicle rear-ends you like there’s no tomorrow. Before you even get the chance to properly understand what happened, you contact your insurance agent and ask for instructions.
You do exactly as they say and, after a tiring evening involving lots of back-and-forth with the at-fault driver, witnesses, and local authorities, you go back home and patiently wait for the insurance company to get back to you with more information. Several days go by, and you receive a call from the adjuster, saying that your claim has been denied. They cannot provide too many details, but they regret to inform you that there’s nothing more they can do. You hang up, flabbergasted, and wonder why this happened and what you can do about it.
Sound familiar? If not, count your blessings, and educate yourself about insurance claim denial, what causes it, and the remedies you have at your disposal in case this ever happens to you. While nobody likes to think about car accidents – let alone about the insurance process that follows suit – it’s essential to understand the risks surrounding auto insurance claims and take appropriate steps to prevent them. As an insurance broker, I’ve seen quite a lot of claim denials, and I’d like to share what I’ve learned throughout the years in hope that you’ll be better equipped to understand what your policy does and does not cover, and ultimately receive proper insurance coverage prior to an accident.
Top Reasons Auto Insurance Companies Deny Claims
There are several reasons why your carrier could deny an auto insurance claim, so before suspecting bad faith, make sure you’re in the clear regarding the following aspects.
Your Selected Coverage
Your policy can only insure against a specific set of damages, for the specific amount of coverage you decide to purchase. Whatever exceeds these limits will be left out in the open. This basically underlines the importance of buying the appropriate insurance for your needs upfront. For example, incidents caused by animals are normally covered by comprehensive coverage, so you can’t rely on “collision” to pay for the damages that result from running into a deer with your car.
The At-Fault Driver’s Coverage Limits
Tennessee is an at-fault state, which means that the driver that causes an accident must compensate the other parties who suffered injuries. The law mandates that each driver carry $25,000 bodily injury liability per person and $50,000 per accident to pay for medical bills and expenses, and $15,000 property damage liability to pay for vehicle or other property damage. If the at-fault driver opted for minimum coverage but the damages they caused are significantly greater than what their policy can account for, your insurance claim might be limited, or denied altogether. The same could happen if their insurance expired or if the specifics of the accident don’t fall within the scope of their policy. A good way to prevent this from happening is to invest in underinsured motorist coverage, which kicks in when the at-fault driver exhausts his coverage and ensures you won’t be left with a massive bill.
Suspicion of Fraud
One of the most common reasons insurance carriers deny claims is suspicion of fraud. The circumstances surrounding each accident are analyzed by a claim investigator, who essentially considers every claim suspicious until proven otherwise – they look at everything from your personal circumstances and economic background to accident timestamps and police reports, all in an attempt to determine the authenticity of your claim. They will review the information you provided about your vehicle and pinpoint any changes or inconsistencies that could indicate dishonesty. And if they notice any red flags, your claim might be denied.
To avoid any suspicion of fraud, I suggest you pay attention to the following:
- Ensure the information you provide to the insurance carrier when requesting a quote is truthful. Polishing up your driving history for the sake of saving a few dollars a month is not worth the risk of losing your coverage when you need it most.
- Don’t, under any circumstances, file false claims. Nothing good can come out of that.
- Be hasty. Don’t wait to report the accident or file your claim, and don’t postpone going to the hospital if you suffered any injuries. Otherwise, your carrier might suspect that your damages were pre-existing and deny protection.
In addition to matters of insurance limits and fraud, a few other technicalities can cause claim denial, such as accidentally letting your policy cancel for missing a payment or not being listed as a driver in the auto insurance contract when the policy is not under your name.
What to Do if Your Auto Insurance Claim is Denied
The first thing you should do if a carrier denies your claim is to keep calm. It’s perfectly normal to feel frustrated, particularly if you don’t know what’s causing the rejection, but try to stay levelheaded and be polite with the insurance company in all communication. Once you’ve got that nailed down, you can:
- Request that the claim denial be sent to you in writing.
- If you believe the company made a mistake, make your case – send photos, eyewitness reports, and whatever other information you possess that could change their mind.
- Contact Tennessee’s Insurance Commissioner’s Office and ask for guidance regarding appropriate next steps.
- Consider getting in touch with an attorney specializing in insurance claims and/or consumer rights.
When NOT to File an Auto Insurance Claim
Filing an auto insurance claim may raise your premiums in the long-term, so it makes sense to forego the process in situations such as:
- when your vehicle is the only one involved in the accident and the fault is your own, particularly when damage doesn’t exceed $1000.
- when the insurance deductible is the same or higher than the repair costs.
- when you were involved in a simple fender-bender and the other party is willing to settle matters privately.
The Bottom Line
Lastly, I’d like to once again emphasize the importance of prevention: the best way to avoid insurance claim refusal is to practice safe driving and be responsible about your policy. It’s better not to give your carrier reasons to deny your claim than to convince them of their mistake.
I hope this post answered most of your questions regarding auto insurance claim denial, and if not, feel free to drop me a line directly – I’ll be more than happy to provide further guidance on the matter!