After a car accident, your insurance company might deny your claim. When this happens, you do have some options, including appealing the claim denial or taking your insurance company to court for a bad faith denial. Whatever you decide to do, make sure that you have all of the necessary information to prove that your car accident claim was justified.
Part 1 of this article covers the most common reasons car insurance companies deny claims and Part 2 talks about what actions you can take if they do.
Part 1 of 2: Reasons for an auto insurance claim denial
While a car insurance company will normally honor your car insurance claim, there are a few reasons for them to deny it. The following details some of the more common reasons behind a claim denial:
- Driver negligence: Accidents that happen due to your negligence as a driver can lead to having your claim denied. Common causes for this kind of denial include drunk driving or letting an unlicensed person drive your car.
- Due to an exclusion: Exclusions on an insurance policy include anything that the policy states the insurance does not cover. Common exclusions include acts of god, intentional actions, and people specifically excluded by name from driving your vehicle.
- No documentation of injury: Failure to document an injury can lead to a denial of a later claim citing lack of proof of injury. After an accident, make sure to have yourself checked out properly by a medical professional to make sure that you don’t have any injuries. This also allows you to provide documentation if you were injured in an accident.
- Pre-existing conditions: Car insurance companies sometimes cite pre-existing conditions as a reason behind injury and pain that crops up following an accident. You may need to prove that the accident actually made your existing condition worse, so get documentation from your medical professional as backup.
- Policy lapsed: When you allow your premium to lapse by not making your payment on time you run the risk of not having coverage if you have an accident. Driving without insurance, which is illegal in all states, can lead to penalties and fines and cause you to lose your license and your car.
- Delays in notifying: Following an accident, the responsibility falls on you to notify your car insurance company in a timely manner. Failure to do so in a reasonable amount of time can lead to a denial of your claim because the insurance company needs time to properly investigate the accident and assign blame properly.
Part 2 of 2: What you can do if your car insurance company denies your claim
If your car insurance company denies your claim, you can consider appealing its decision. In an appeal, you file a complaint with your state’s Department of Insurance. Some states use claims mediation programs to help settle claim disputes between drivers and their insurers.
If your car insurance company still refuses to cover a claim after you appeal, then consider legal court action, specifically if you believe your insurance company is acting in bad faith. A bad faith denial represents when an insurer seeks to avoid meeting its obligations to you as a policyholder, even if you pay all of your premiums and follow all of the stipulations of your policy.
If you have a sound legal case, you should consider taking your car insurance company to court. If you end up taking your car insurance company to court, you could claim the following damages:
- Compensatory damages: Damages awarded by the court to compensate you for the insurance claim denial.
- Consequential damages: Damages awarded by the court toward any possible future expenses resulting from the denied claim.
- Punitive damages: Damages awarded by the court to punish the car insurance company for their act of bad faith in denying your claim.
- Attorney’s fees: The court can also order the car insurance company to cover any lawyer fees you incurred as a result of the claim denial and having to take the company to court as a result.
Normally, most drivers do not encounter problems after filing an insurance claim. Occasionally, your car insurance company might deny your claim for one reason or another. In cases like this, your options include appealing the decision with your state’s Department of Insurance or taking the company to court