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What to do when your insurance company denies your claim

Fact-checked with HomeInsurance.com

Can an insurance company deny a claim? Yes, they can and do deny claims on a regular basis. If you are caught in the unfortunate situation of having to file an auto claim, you want to be sure that you’re getting the fairest settlement from your insurance company. If a claim seems wrongly denied, you may need to take action to determine if there’s any way the decision can be reversed or reconsidered.

A good first step is reading the fine print of your policy — this may help shed light on how your insurer pays for claims. If your claim was completely denied, you can review your policy to see exactly what was denied and why. 

Receiving a denial decision doesn’t have to be the end of your case. If you’ve reviewed your policy and you genuinely feel that you’ve been dealt with unjustly, there may be steps you can take to work with your insurer to reach a decision that both you and the company are happy with. Let’s take a closer look at how that might work.

What is an insurance claims denial?

Let’s say you’ve filed a claim after a fender bender that left you with several thousand dollars of damage to your car. Your policy includes collision coverage, so you’re pretty sure you’ll be receiving a check in the mail soon. Instead, you receive a “we regret to inform you” letter that states that your claim has been denied. Or, you receive a check that covers only a small portion of the damages done to your car — far less than would account for your deductible.

This scenario describes an insurance claim denial. The denial may come from your own insurance company. Or, if the accident was the fault of the other driver, it may be coming from their insurer. Either way, it typically means you’re short on the money you need to repair your car — or, possibly, to pay your medical bills if you were injured. Your first reaction is probably bewilderment. 

Why was my claim denied?

Your insurance company has employees, called insurance claims adjusters, whose sole job is to assess each filed claim and determine the company’s legal obligation to make a payout on claims. The rules and regulations surrounding insurance obligation changes on a somewhat regular basis, so it’s important to understand what recent laws may apply in your state.

Most claims with documented damage are valid, and depending on the testimony of witnesses present to the collision or cause of loss, the claim will typically be approved without incident. But some cases are a bit murky, and there are several reasons an insurance claim can be denied. Some common reasons why a claim might be questioned and denied include the following:

  • Your claim is worth more than your coverage. For example, if you have bodily injury liability coverage for $25,000, but your accident causes $35,000 of medical injuries to the other driver, the additional $10K would be denied.
  • You don’t have the coverage necessary. If damage was sustained from a non-accident related loss and you don’t have comprehensive coverage, for example, your claim might be denied.
  • Discrepancies exist on your original application for insurance. If you weren’t completely honest on your application, or you failed to provide completely accurate information, your insurer can refuse to pay out on a claim that would otherwise be covered. Underreporting mileage or failing to mention specific upgrades to your vehicle are examples.
  • You were breaking the law during your claimable accident. Say you were intoxicated or driving without a license when the accident happened — even if it’s not your fault — your claim may be denied.
  • You did not report the accident in a timely manner. If you fail to report to the police and your insurer, or did not seek any necessary medical attention immediately after the accident, your claim may be denied. If you suddenly decide that you have whiplash two weeks after your accident, your insurer has grounds to suspect insurance fraud. 

What do you do if your claim is denied?

The possible reasons for claim denial listed above are all valid reasons why an insurer might deny your claim — and the reasons would probably hold up in court, if your case got that far. But you may still be asking, “what do I do if my car insurance claim is denied? Are there steps I can take to make it more likely that I’ll be able to reverse their decision?”

Report the claim immediately

Many insurers make it possible to initiate the claims process via the provider website — which means you should be able to do it while you’re waiting for the police to arrive. If not, however, make a call to your agent as soon as possible. Get the other driver’s insurance information immediately after the accident, and never let the other driver talk you out of calling the police. A police report can help significantly when you need to justify a claim. As part of due diligence in initiating the claims process, take lots of photo or even video footage to verify the extent of damages.

Make sure your claim is with your own company

It’s a good idea to avoid filing a claim with the other driver’s insurer whenever possible, even if that company is one that needs to pay out because it was the other driver’s fault. Through a process called subrogation, your insurer can help you recover expenses from the other driver’s insurance company. Since your insurer has more legal and insurance experts than you do, let them do the heavy lifting.

Get detailed estimates

The more information you have, the better a result you will typically have with your claim. One way you can do this is to have your repair shop give you an itemized, detailed estimate of repairs. Don’t make the mistake of going just anywhere for your repair estimates. 

If you don’t have a trusted mechanic, ask your friends and family for recommendations and get estimates from those shops. If your insurer tells you to get an estimate from a certain shop, do so, but also provide them additional estimates from other shops to verify going rates. 

Get estimates based on original factory (OEM) parts

You have the right to have your car returned after repairs in the same condition it was in prior to the accident. For some insurers, you need a specific rider on your policy to request original equipment manufacturer (OEM) parts — that’s something you should ask about when you sign up for your policy. Even if it costs a few more dollars, it’s a good idea to invest in this coverage.

Know your rights if you disagree with the auto insurance settlement

If your car is a total loss, be prepared for the payout to be less than what you owe on the car, or less than what you think the car is worth.

Auto insurance companies typically insure cars based on “Actual Cash Value” (ACV). This means that the resale value will determine what compensation they provide to replace your car. Depending on what service they use to determine market value, the exact amount could vary from one company to another.

If you feel your car is of higher value than the ACV, you may need to do some footwork to prove that. Possible factors could include how well you took care of the car, if you kept it in the garage, had very low mileage, and did regular maintenance work. This might require receipts and documentation, so if you do take care of your vehicles in this manner, it’s important to keep all receipts and documents.

How to challenge a claims denial

If you believe that you have a valid reason to challenge a claims denial, request a dispute and try mediation first. You won’t need legal representation when requesting a dispute and mediation, and it’s less expensive. 

Don’t sign any paperwork agreeing to a settlement amount or cash any insurance checks until you’ve considered the process of filing a dispute — the act of cashing a check may constitute agreeing to the settlement, and you might not be able to dispute your case after that.

When you’ve requested mediation, the neutral party — the arbitrator — will first usually choose a neutral repair shop to give an estimate. After reviewing information from both parties, they will rule either for you or against you. 

You may also hire an independent claims adjuster who can work with the mediator and the insurance company and who is there to serve your interests, not those of the insurance company. 

If you’re still not satisfied with the results of mediation, your next step would be to hire an attorney or go to your state’s Department of Insurance, which will put the case into arbitration. The person conducting the arbitration will be an appraiser who considers both sides’ information and makes a legally binding ruling.

The takeaway

  • When you have an accident, file your claim immediately with your insurer, providing as much documentation as possible.
  • A claim denial can happen for a number of reasons, but if you feel it’s unfair, you can take steps to request a change to your company’s decision.
  • If you challenge the ruling, a mediator can make a decision on your behalf.
  • Your last resort is going to your state’s Department of Insurance and lodging an appeal.


In the case of a car insurance claim denial what next steps can you take? Make sure you’re documenting everything, from medical bills to police reports and repair estimates. If you need to, you can ask a mediator to step in to assess the situation. If even that doesn’t help, your state’s Department of Insurance is a last recourse for having a claim adjusted or changed. Knowing your policy coverage and rights as a policyholder is essential to knowing what expectations to have regarding claim payout.

Mary Van Keuren

After 30 years as a writer and editor in academia, Mary now writes full-time for the insurance and finance industries. Her work has appeared on Reviews.com, TheSimpleDollar.com and Bankrate.com, as well as other consumer-focused websites.

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