Michelle Lambright Black is a credit expert, freelance writer, and founder of CreditWriter.com. She has over 20 years of experience writing and speaking about credit and money, and focuses on helping families and small business owners make smart, informed decisions about their credit, money, and financial products (including insurance). Michelle's work has appeared in publications such as Yahoo! Finance, Reader's Digest, Parents, FICO, Forbes, Bankrate, The Seattle Times, MarketWatch, BuySide from Wall Street Journal, USA Today, and more. She's also a three-time finalist for the best personal finance freelancer award from the Plutus Foundation. When she isn't writing or speaking about credit and money, Michelle loves to travel with her family or read a good book. You can connect with Michelle on Instagram or Twitter.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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Drivers file car insurance claims after an accident to cover damages, repairs, or injuries. If your insurance lapsed, you’ve broken the law, or you filed a claim late, your car insurance company could deny or underpay your claim. But if you think the claim should fall under your coverage, you may be able to dispute the claim denial.
Here’s what you should know about why car insurance companies deny car insurance claims, as well as some helpful steps to take if your insurer denies your claim.
Main reasons insurers deny claims
Car insurance companies deny claims from time to time, which can be stressful if you’re expecting reimbursement for car repair or replacement, medical expenses, property damage, or other damages. Insurers typically send a claim denial in the mail. So if you don’t receive a notice, ask for written confirmation of the denial that includes the reason(s) your insurer refused your request for coverage.
Claim denials may result from issues with your insurance coverage, problems with the circumstances surrounding your accident and claim, or bad faith on the part of the insurer. Below is a closer look at some of the most common reasons why insurers deny claims.[1]
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Issues with your insurance coverage
Insurers may deny claims for various problems with your car insurance coverage. Examples include:
Insufficient coverage: Choosing liability-only car insurance could save you money. But if you’re in an accident, you may not have complete protection. Picking the right type of insurance is important, too. For example, you’ll need collision insurance to cover damage to your own vehicle in an at-fault accident.
Policy exclusions: Insurance policies often contain exclusions, like using the vehicle for business deliveries or ridesharing. Be sure you’re aware of what your insurer excludes from your policy to avoid a claim denial.
Lapsed coverage: Insurers can deny a claim for a lapse in car insurance. Keep your car insurance current to avoid potential issues.
Non-payment of premiums: Unpaid premiums could result in claim denials. Pay your insurance premium on time to avoid any issues should you need to file a claim.
Incident circumstances
Car insurance companies may also deny claims due to the details surrounding an accident or incident. Below are some possible examples:
Breaking the law: If you broke the law while operating your vehicle and an accident happened as a result, your car insurance company might deny your claim. Driving under the influence, speeding, and driving without a license are a few examples of violations that could cause potential problems during the insurance claims process.
Not seeking medical care: It’s important to seek medical treatment, if you need it, immediately after a car accident. If you wait to see a doctor, your insurance company might be able to argue that your injuries resulted from something other than the original car accident.
Accident with uninsured motorist: Some states don’t require drivers to carry uninsured motorist insurance. If you don’t have this type of coverage and you’re in an accident with a driver who’s uninsured or who flees the scene, your insurance company might deny your claim for reimbursement.
Claim circumstances
It’s also possible for car insurance companies to deny claims based on details surrounding the claim itself. Here are a few scenarios where you might encounter this type of issue:
Liability dispute: It’s not always clear who’s at fault in a car accident. If your insurance company believes you’re not the cause of the accident, it might deny your claim and contact the other driver’s insurance company.
Not filing soon enough: It’s best to report an accident to your insurance company right after it occurs. If you wait too long to file a claim, your car insurance company might deny it. Furthermore, waiting too long to file a claim could also cause problems when it comes to your state’s statute of limitations for filing a personal injury lawsuit if you desire to do so.
False statements: Making false statements when you file a claim can cause your insurance company to deny you. But lying to your insurer carries a bigger risk than the mere denial of a claim — it’s fraud. If you knowingly provide incorrect information to an insurance company and you’re caught, you might face criminal charges.[2]
Bad-faith claim denial
Most insurers deny claims for legitimate reasons, but when an insurance company denies a valid claim, it’s known as acting in bad faith. If an insurer engages in any of the following behaviors during the claims process, you may be the victim of a bad-faith denial.
Ignores or refuses your requests for documentation
Denies your claim without providing an explanation
Refuses to pay a legitimate claim
Fails to perform a reasonable claim investigation
Delays payouts on valid claims
Offers you a lowball settlement offer for significantly less than the value of your claim
Threatens you
Asks for unreasonable or unnecessary paperwork
Good to Know
You may decide to consult with an attorney if you believe your car insurance company is operating in bad faith. Seeking legal counsel can help you make sure you have someone who has the knowledge to review your situation and advise you of your potential options.[3]
Steps to take if your insurer denies your claim
Just because an insurance company denies your claim doesn’t mean all hope is lost. If you believe a claim denial is unfair, you can appeal your insurer’s decision and ask it to reconsider.
Here are some basic steps you can take:
Review the denial letter
Look over the denial letter to understand the reasons for the denied claim. These details can help you build a counterargument.
Gather evidence
Put together any documents you have that may help support your claim. Pictures, videos, police reports, witness statements, medical history, medical records, and medical bills are a few examples of evidence that might be useful. (And make sure to hang onto your originals.)
Consider hiring outside help
Working with a lawyer or an independent claims adjuster might be useful if you believe you need help strengthening your case.
Write an appeal letter
Your appeal letter should detail why you disagree with the insurance company’s decision to deny your claim. Point to the evidence you’ve gathered and explain how it supports your claim. (You can find sample appeal letters online for guidance.) Consider sending your appeal letter via certified mail with a return receipt requested for your records.[4]
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Insurance claims FAQs
Below is some additional information about why car insurance companies deny claims and what you can do about it.
Why would an insurer reject your claim?
Car insurance companies deny claims for various reasons, including a lapse in coverage, policy exclusions, non-payment of insurance premiums, and illegal activities. Claimants should be aware of insurance policy terms to help avoid denials.
How often do insurance companies reject claims?
Car insurance companies don’t always reject claims, but insurance claim denial can happen. You can protect yourself financially by becoming familiar with the fine print of your auto insurance policy. Make sure you have the right types of insurance and carry enough coverage to provide sufficient financial protection while you’re behind the wheel.
Can you appeal if your insurer denies your claim?
Yes. If you believe an insurer didn’t have a legitimate reason to deny your claim, it’s possible to appeal the decision.
But if you feel like an insurance company is acting in bad faith, it may be best to consult with a trustworthy attorney, like a personal injury lawyer, for legal advice and help navigating the appeals process. Just keep in mind that you may face time limits for appeals, so you’ll need to act in a timely manner.
How long does it take for insurers to approve your claim?
It depends. The insurance claim process can vary from one situation to the next. With simple accidents, an insurer may resolve your claim within a few short weeks. But more complicated claims could take months to investigate and settle (assuming the insurer doesn’t deny the claim).[5]
Michelle Lambright Black is a credit expert, freelance writer, and founder of CreditWriter.com. She has over 20 years of experience writing and speaking about credit and money, and focuses on helping families and small business owners make smart, informed decisions about their credit, money, and financial products (including insurance). Michelle's work has appeared in publications such as Yahoo! Finance, Reader's Digest, Parents, FICO, Forbes, Bankrate, The Seattle Times, MarketWatch, BuySide from Wall Street Journal, USA Today, and more. She's also a three-time finalist for the best personal finance freelancer award from the Plutus Foundation. When she isn't writing or speaking about credit and money, Michelle loves to travel with her family or read a good book. You can connect with Michelle on Instagram or Twitter.
Background working with banks and insurance companies
Sarah enjoys helping people find smarter ways to spend their money. She covers auto financing, banking, credit cards, credit health, insurance, and personal loans.
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