We buy car insurance hoping we never need to go through the process of submitting a claim. When accidents happen, we hope the claims process is smooth and simple. Seems like a reasonable expectation because you or the at-fault driver paid your premium every month in a way that made it smooth and simple for the insurance company. But it does not work that way, right?
There are several reasons that your claim may be denied. This denial can often cause a significant financial strain on you and your family. . If you’ve recently been in a car accident, you may be counting on the money from the insurance claim to pay medical and other bills.
If your claim has been denied, you need to figure out quickly why and what you can do to get the money you deserve.
The Most Common Reasons for a Claim Is Denied
The most common reasons for denial typically are:
- Policy Coverage – In this instance, your insurance policy may not provide coverage for your type of claim. In some cases, for example, your accident may fall under collision coverage rather than liability coverage. On the other hand, insurance policies usually include a laundry list of items that aren’t covered. So the insurance company may use an exclusion to claim your accident wasn’t covered by your policy.
- Lapsed Coverage – In this case, it may be that the insurance premium was not paid at the time of the accident. Therefore, the insurance company may claim that there was a lapse in coverage, and at the time of the accident, no coverage existed.
- Disputed Liability – The insurance company in this case is disputing that their policyholder did not cause the accident or that accident did not cause your injuries and therefore is not required based on your policy to accept the claim.
- Failure to Notify – As a policyholder, you must timely notify your insurance company of your accident. Failure to do so may result in the insurance company claiming they did not have an opportunity to investigate the claim.
- Violating the Law – Under certain insurance policies, your insurance company can deny your claim if you are found in violation of the law when the accident happened.
- Violating Insurance Policy – Likewise, if you misrepresent information when purchasing your insurance, such as the purpose or use of your car, your claim can be denied.
- Avoidable Accident – In Maryland and four other states, contributory negligence bars your claim. This means if you are 1% responsible for an accident, you cannot recover. Unlike many of these above, this is a common source of denial of claims, particularly in Maryland, Alabama, Washington, D.C., North Carolina, and Virginia.
When a Denied Claim May Be in Bad Faith
If none of these common reasons for denial apply to your case, then the insurance company may be acting in bad faith. When you are purchasing car insurance, the policy becomes a contract. The insurance company agrees to pay claims unless one of the policy exclusions or common reasons for denial applies, and you agree to pay the monthly premium.
Every state requires parties to a contract to act in good faith. This means that each party is honest and does its best to deal fairly with the other party. So if insurance company denies your claim, it has to have a valid reason for denial. If the company knows its policyholder is at fault and no exclusions apply, and a claim is denied anyway, the company may be acting in bad faith. If you believe that this is what has happened to you, you may be able to sue your insurance company. Personal injury law pertaining to car accidents can be a lengthy and complicated process. To receive the best results, consider contacting an experienced personal injury lawyer with a track record of success. Two keys: experienced and track record.
Appealing Your Denied Car Insurance Claim
If you were in a car accident and you were counting on the money from the insurance claim to pay medical and other bills, a denied claim may feel like the end of the world. However, generally, that’s not always the case. If your car insurance claim was denied you’ll likely have legal options for resolving it. Typically, the most beneficial legal options for resolution are:
- Discuss the Denial With the Insurance Company – Commonly, as part of the denied claim, the insurance company will provide instructions on how to appeal. Writing a letter or calling the insurance company to discuss the denial is a good first option in the appeals process. (Does this ever work? Not really. Most likely you will have to bring a lawsuit.)
- Filing a Bad Faith Claim Against the Insurance Company – As discussed, if the insurance company knows its policyholder is at fault and no exclusions apply, and a claim is denied anyway, the company may be acting in bad faith. If you believe that this is what has happened to you, you may be able to sue your insurance company. This instance certainly requires the help of a car accident or personal injury lawyer to determine the chance of success. If you have a well-supported case, your chances are higher, that the insurance company will reverse their decision. If they don’t settle a claim promptly or deny it without good reason, they could violate state laws and be acting in bad faith. This will likely increase your chances of success. (Does this ever work? Sometimes if you file a complaint with your state’s insurance administration.)
- Filing a Lawsuit Against the Other Party – If none of the other appeals are successful, filing a lawsuit against the other party in the accident can be an extremely beneficial alternative coarse of action. Generally, you will not have to go through a trial. Getting in touch with an experienced attorney can help build your case. Doing so will most likely allow you to settle outside of court if the opposing party was at fault. (Does this ever work? This usually works if you have a good case. Most good cases settle long before trial.)
While denial of a car insurance claim can feel like a major setback, knowing the steps to move forward is critical to your success. Once the frustration subsides, discover why your claim was denied, gather all the relevant information, get familiar with your case, and get in contact with an experienced attorney. Following these steps will help you and your family move forward in the best possible way.