What Do I Do If My Insurance Company Denied My Claim?

Reader Question: What can I do if an auto insurer offers me a settlement amount that’s not enough, or if they deny a claim completely? Is there anything at all I can do?

If you face the unfortunate situation of an auto claim, there are ways to ensure you’re getting the fairest settlement from an insurance company. Similarly, if a claim seems wrongly denied, you can take action.

Some auto insurance companies have a reputation of paying less than what one may think should have been received for the car. Reading your policy (as boring as it may be) may help shed light on how your insurer pays for claims, and if your claim was completely denied, you can review your policy to see what coverage you apparently denied or didn’t ask for. Otherwise, there are a few steps you can consider if you honestly feel you have a strong case. Before you even get to that point though, there are a few things you should always do as soon as you file a claim.

1. Get estimates from high-quality repair shops.

Don’t make the mistake of going just anywhere to get repair estimates. Find out who the best mechanics are in your area so you can be assured you’ll receive accurate estimates. Depending on whether you’re working with your insurer or someone else’s, you may be told where to get estimates from, and of course you have to follow through with that, but you have to be your own advocate — get estimates from a couple places of your choosing as well so you have some comparisons to offer.

2. Get detailed estimates.

• Have auto repair shops create very detailed estimates. Itemizing the details of what your car will need will make it easier for the insurance company to understand what the repair cost entails.
• You can also request a detailed report from the claims adjuster who will probably make out his or her own estimate. Make sure those reports are detailed too so you and your insurer can see accurate comparisons.

3. Get estimates based on original factory parts (OEM) parts.

• You have the right to have your car returned after repairs in the same condition prior to the accident. You’ll also want to check with your insurer to see if you need to have an addendum that will allow you to do that.
• Sometimes you have to actually choose that specific coverage in order to allow for OEM. The rate may be a few more dollars, but it will be worth it in the end.

4. 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 insure regular personal cars on an “Actual Cash Value” (ACV) basis. This means that whatever the book value is will be what they give you to replace your car.
• Depending on what service they use to determine value, it could vary from one company to another.
• If you feel your car is of higher value than the general ACV, you may need to do some footwork to prove that. Possible scenarios could include if you took immaculate care of the car, kept it in the garage, had very low mileage, and obsessively did regular maintenance work. This might require receipts and documentation, so if you do take care of your vehicles in this manner to keep all receipts and documents.

5. If you still end up with a settlement amount you don’t agree with, request a dispute and try mediation first.

• You won’t need legal representation when requesting a dispute and mediation, and it’s certainly less expensive. You definitely don’t want to sign any paperwork agreeing to any settlement amount, nor cash any insurance checks until you’ve considered the process of filing a dispute.
• When you’ve requested mediation, the neutral party — the arbitrator — will first usually choose a neutral repair shop to give an estimate.
• Sometimes the act of cashing a check constitutes agreeing to the settlement, and you won’t be able to dispute your case after that.
• If you’re still not satisfied with the results of mediation, your next step is 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, consider both sides’ information, and make a legally binding ruling.

6. Take the information from all evaluations to your state’s insurance commissioner’s office.

• If insurers feel the settlement offered is justified or if they feel justified in not paying the claims, and you still believe they’re wrong, you can appeal to your state’s insurance commissioner.
• Your state’s Department of Insurance will analyze it and determine what the results should be.

7. If you’ve gone to the state commissioner and it’s still denied or not an amount you deem fair, or if you feel you have a strong enough case to take legal action, seek out an attorney that specializes in insurance claims and file suit.

• Be aware that you must have a legal and valid reason to pursue legal action. You can’t just sue someone because you’re mad you didn’t have enough coverage or the right coverage.
• If it was simply a matter of not having the right coverage, you may not want to take it any further because one lawsuit and one attorney is not going to change the way insurance and claims are handled. It also won’t change the fact that if you didn’t ask for a specific coverage or if you denied it. That’s on you, no matter how painful it may be to accept. Many have attempted to sue insurers or brokers who either didn’t offer a coverage or who offered it but didn’t heavily encourage it. Consider the case of Hulk Hogan, who sued his insurance broker in 2011 for not “pushing” Hogan enough to get an umbrella liability policy, which would have benefited Hogan when his son caused a car accident that left his son’s passenger with permanent brain damage. The court quickly ruled that it was Hogan’s responsibility to obtain the coverage, regardless of whether the broker even suggested it to Hogan.

Don’t be afraid to speak up if you feel an insurance company isn’t providing you a fair settlement or if they’ve denied a claim you think should have been paid for. There are several steps you can take before it gets too complicated and before you end up spending more money on an attorney than you would get in a settlement.


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