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Auto insurance claims denial

Fact-checked with HomeInsurance.com

Auto insurance companies deny claims every day. It’s important to know what your policy covers and what it doesn’t, along with the steps you need to take to ensure your provider will pay a claim. You don’t want to receive a “claim denied” message. Often, insurers deny claims for reasons you could have avoided, such as lapsed coverage. But sometimes carriers deny claims for reasons that leave policyholders scratching their heads.

Common reasons for auto insurance claims denials

When you purchase auto insurance, it’s easy to believe you’ll have no worries when an accident happens. But one error can mean the difference between getting a claim check in the mail and receiving a claim denial letter. 

Not reading details can cause problems in auto insurance claims processing systems. Most auto claim denials fit into a few categories, including:

Coverage issues

If you file a claim with your carrier for auto body repair following an accident but you don’t have collision coverage, the insurer will deny the claim. 

A provider may also deny a claim if the amount of damage exceeds the limits of your coverage. For example, if your property damage liability limit is $10,000 and you file a claim for $15,000, the provider won’t cover the entire repair costs. 

You must also be aware of your deductible. If you have a $1,000 collision deductible, you can’t file a claim for a $1,000 repair unless you’ve already exhausted your deductible.

Avoidable accidents and law violations

If you cause an accident by driving recklessly or driving under the influence, your insurance company won’t pay the claim. Any violation of the law can lead to a claim denial, including texting while driving, driving with an expired license or driving without a license.

Driver issues

Always list all drivers in your household on your car insurance policy. If a driver who isn’t on the policy causes an accident while driving your vehicle, your insurance company might not pay the claim.

Medical treatment issues

Injured parties in an accident should seek medical treatment immediately. Otherwise, the insurance carrier may deny the claim. 

An insurer may also deny a claim if it determines a person’s injuries were related to a preexisting condition. For example, if a passenger needed a knee replacement at the time of a collision, the insurer may deny a claim that includes medical treatments of a knee injury caused in the accident. The provider may also determine that the injuries aren’t as severe as reported in the claim.

Reporting issues

Always report an accident right after it occurs. If you don’t, the insurer may deny your claim. The fine print of your auto policy should detail the insurer’s accident reporting expectations.

These claims denials can occur when you file a claim with your insurer or the other driver’s, regardless of who was at fault for an accident.

Remember the basics

Claims can be denied for a variety of reasons. Make sure you know what your policy won’t cover.

How to avoid a claims denial

Sometimes an insurer denies your claim for reasons you can’t control, like when an at-fault driver’s coverage has lapsed. However, you can often take steps to avoid a claims denial as part of the automobile insurance claims process:

  • Always pay your premium on time.
  • Avoid filing an excessive number of claims.
  • Avoid making a recorded statement about an accident.
  • Don’t file false claims.
  • Don’t post photos or details of an accident on a social media account that an insurance adjuster might see.
  • Include all regular and occasional drivers of your vehicle on the insurance policy.
  • Purchase more coverage than your state requires.

You can also look at your policy documents for additional tips.

How to appeal the insurance provider’s decision

An insurer may deny an entire claim or part of a claim as part of its insurance claim investigation process. For example, the provider may decide that a passenger’s injuries were due to a preexisting condition, not caused by the accident, but still pay to repair your car. Each insurance company has a formal dispute process, outlined in your policy’s details. 

If you aren’t satisfied with your claim, you can take steps to appeal the decision.

  1. Review your policy: By doing this, you’ll know exactly what it does and doesn’t cover before you file a claim. Prior to and during the appeals process, keep all bills related to the traffic accident.
  2. Talk to your agent: Ask your agent about the steps you can take to file an appeal if your claim is denied. Go through this process first.
  3. Wait to cash checks: Don’t cash any checks you receive if the claim doesn’t seem right, such as if the amount is lower than the claim amount or if your provider cancels your insurance and sends you a refund of your premium balance. 
  4. File your appeal in writing: If you speak with your agent over the phone, take detailed notes about each discussion.
  5. Reach out to other authorities if necessary: If you believe an insurer has treated you unfairly, file a complaint with your state’s insurance commissioner. Although the state’s insurance department won’t represent you, it may determine that the insurer hasn’t followed insurance code when assessing your claim. Some state departments of insurance have help lines or places to file complaints online. You may also file a complaint against the insurance company on the Better Business Bureau website. BBB complaints can negatively impact any business, so they like to resolve them quickly.
  6. Hire a lawyer: If you can’t get the resolution you believe you deserve, hire a lawyer that understands insurance codes and can often find legal violations in your claim denial. Hiring a lawyer gives your grievance more weight, because insurers know that if they don’t resolve the dispute, it may lead to litigation that could cost more than your initial claim. In some cases, the insurance company may decide to pay a claim after receiving a demand letter from your lawyer.

Even if you follow all of these steps, your claim might still be denied. By going through this process, however, you have the most chance of getting money from your insurance provider. 

The takeaway

As you can see, simply buying an auto insurance policy doesn’t guarantee you’ll receive the protection you expect. You don’t want to have your insurance claim denied. By following a few tips, you can improve your chances of your insurer approving a claim:

  • Avoid accidents and follow the rules of the road.
  • Pay your premium on time.
  • Report accidents immediately.
  • Seek medical treatment immediately after an accident.
  • Understand your coverage.

Typically, insurance companies deny claims for a handful of reasons. You can take steps to avoid claims denials, but in some cases, you won’t always receive the claim check you expected. The key to a successful claim starts the day you receive your policy, by reading and understanding the agreement you’ve made with your insurance company.

If your insurer denies a claim, you can appeal the denial and, in some cases, come to an agreement without taking further action. If you feel your provider hasn’t treated you fairly, file a complaint with your state’s department of insurance or the Better Business Bureau. And if all else fails, hire a lawyer and fight.

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