Getting into a car accident can be a traumatic experience and when it happens, you depend on your car insurance to come through for you. There are some instances, however, when a car insurance company may deny your claim and leave you financially responsible for the incident. Learn four of the most common reasons why your insurer may deny a claim and how to keep it from happening to you.
No-Fault vs. At-Fault States
Different states have different laws and regulations surrounding car insurance. Some states are no-fault states while others are at-fault. It’s important to know your state’s laws in order to understand why your claim might get denied.
In no-fault states, each insurance company compensates its own policyholders for the cost of minor injuries, regardless of who was at-fault in the accident. Motorists involved in an accident may only sue the other party for pain and suffering if the case meets certain conditions that relate to the severity of the injury. No-fault states include Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota, and Utah. Kentucky, New Jersey, and Pennsylvania are “choice” states because they allow the driver to choose either a no-fault or an at-fault policy.
Most states, including California, are at-fault states. In these states, there are no restrictions on lawsuits. Additionally, the driver at fault in an accident is responsible for damages to other involved parties. The at-fault party’s insurance company compensates the person who caused the accident by paying up to the limits on their insurance policy.
Commons Reasons a Claim is Denied
Unfortunately, car insurance companies deny claims for many reasons. Below are four of the most common reasons why this might happen.
You don’t have full coverage: Many people don’t understand all of the facets of a car insurance policy. Depending on the type of coverage you purchased, you may or may not receive benefits when you get into an accident. Below are the basic elements to most car insurance policies:
Liability: Liability pays for damages you’re responsible for in an accident, including any property and medical damages you caused. This type of coverage is required.
Collision: Collision repairs your car even if the accident is your fault. You’re responsible for the deductible, and your insurer pays the rest of the repair costs. If your car is completely destroyed and undrivable, your insurer will cut you a check for the actual cash value of the vehicle. This type of coverage is optional.
Comprehensive: This covers your car if anything outside of accident damage happens to it. Examples include theft, vandalism, damage from a flood, fire, falling trees, and more. This type of coverage is optional.
Personal injury protection (PIP): This coverage is only required in no-fault states and covers medical expenses for you and your passengers.
Uninsured motorist: Uninsured motorist covers your expenses when you get in an accident with a driver who doesn’t have insurance. It’s usually not required, but it’s beneficial.
Underinsured motorist: This covers your expenses when you’re in an accident with a motorist who doesn’t have their state’s required liability limits.
For example, if you’re the responsible party in an accident and you don’t have collision coverage, you won’t receive the funds from your insurance company to fix your car. Only the non-negligent driver will receive funds from the liability portion of your policy.
You waited too long to report the incident: Make sure to check your policy to see how long you have to make a report after an accident. Otherwise, your insurer could say they didn’t have enough time to research the incident and then deny your claim.
You were driving under the influence of drugs or alcohol: While this one may seem obvious, it’s one of the most common reasons car insurance companies reject accident claims.
Your state has no-fault coverage: As mentioned above, several states have no-fault insurance laws, which means drivers cannot file a personal injury claim against the responsible driver.
What Should I Do if My Claim is Denied?
If you were involved in an accident and your car insurance company denies your claim, don’t panic. Request a letter from your insurer outlining why your claim was denied. If you believe your claim was denied unjustly, you may have a bad-faith lawsuit.
If car insurance companies don’t uphold reasonable standards, they’re considered to be acting in bad faith. Examples of bad faith include:
- There was no reasonable basis for the insurer’s denial of benefits.
- The insurer had knowledge of the lack of a reasonable basis for denying your claim.
- The insurer attempts to determine your policy eligibility after your claim is filed and use that justification to deny your claim. The insurer should have done this before issuing the policy, not after you file an accident claim.
If your insurer’s reasons for denying your claim don’t align with the facts of the incident, you have the right to dispute the decision. Make sure you have proper documentation to support your case.
Get the Right Representation
If you were in a car accident and your claim was denied, make sure you hire the right attorney to fight for you. Our attorneys at the Law Offices of Schurmer and Wood have been serving clients in Oxnard, Ventura, and Santa Barbara counties since 1968. We have a proven track record of success and have secured millions of dollars for our clients.