One of the most important questions overlooked when securing an auto insurance policy is whether insurance companies can refuse to pay an auto claim. In some cases, they absolutely can. Car accidents happen, and if you are unfortunate enough to get involved in one, you want to ensure you get the best possible settlement from your insurance company.
If you are looking for auto insurance, consider consulting an insurance advisor to help guide you through the best possible options. Insurance brokerages like Surex work with leading insurance companies to provide insurance quotes that will best suit your requirements.
In the event that your insurance company refuses to pay out the claim, you will first have to determine the cause of why your claim was denied and then take action accordingly, to either reverse or reconsider the claim. The last thing you want from your car insurance company is to have your claim refused, so pay close attention to make sure you understand the process.
Why Is an Insurance Claim Denied?
Insurance claim adjusters at insurance companies are responsible for assessing your claims, and then determining whether to make a payout. An insurance company can completely refuse to pay your auto claim or pay less than the amount you are asking for several reasons.
- Discrepancies or misleading information on your insurance application. If you are dishonest or have left out critical information on your application, a claim otherwise covered may be refused. Additionally, if you fail to report changes in your circumstances, it may also result in a denied claim.
- Exclusion clause on your policy or policy coverage. Sometimes known as an uninsured loss, some claims are simply not covered by the policy. For example, in the case that you do not have comprehensive coverage, your claim may be denied.
- Missed payments and enforcement period. Missing an installment that causes policy cancellation can lead to a denied claim. It is possible that the policy was not active when the incident occurred.
- Reporting of the incident. Failure to report the incident on time to the police and your insurer can result in your claim being denied. Reporting the incident after a week or two can give your insurance company a reason for suspicion and fraud. Likewise, not seeking medical attention in case of injury gives insurance claims adjusters the right to doubt your injury.
- Claim is worth more than the coverage offered. If your liability coverage is lower than the claimable amount, additional charges would be denied.
- Failure to disclose all the relevant information. Failing to release all the information that could affect your claim can be grounds for denial.
- Breaking the law. If you are found breaking the law, for example, driving while intoxicated or with a suspended or no license at the time of the incident, the claim may be denied. Exaggerating the claim to get a higher payout can also create suspicion with your insurance company.
Steps to Take If Your Claim Is Denied
While all of these reasons are grounds for the insurance company’s refusal to pay a claim, if you are still unsure why your claim was rejected or strongly believe that you were wrongfully denied a valid claim, take the necessary steps to reverse or challenge the decision. However, do not jump to filing a lawsuit immediately. It is often possible to work out a settlement with the insurance company by taking appropriate steps.
- Ask for an explanation of why your claim was denied. You will not be able to get very far in reversing the decision of your insurance company refusing to pay the auto claim if you do not understand what you are challenging. Insurance companies usually send a letter of explanation or email detailing the reasons behind a rejected claim. Go through the explanation in detail. If you fail to comprehend a certain code used to explain the decision, call and ask them for help. In some instances, a refusal might be due to insufficient information. If that is the case, you may be required to provide your insurance company with additional information.
- Stay calm and do not get angry. Insurance company representatives are accustomed to getting yelled at. It is important to remember that no amount of shouting will help unless you take the appropriate steps to challenge the decision.
- Have your paperwork and evidence in order. True for any claim, make sure you have a copy of all the relevant documents in case you have to appeal a claim. This includes a copy of the police report, witness statements, any photos taken at the time of the incident, repair estimates, and medical bills. In case of a collision with another driver, you also need to collect their information.
- Be patient and be consistent. The process can be long and frustrating—do not fall victim to this tactic. Stay on course and follow up with your insurance company. Be persistent and document the entire process.
- You can also take the following steps.
- Reach out first to the claims department manager
- Contact the insurance company’s ombudsman if the claims manager isn’t addressing the concerns
- Reach out to the provincial insurance regulator if the ombudsman doesn’t address the concerns
- Seek legal action if required
Being well-informed of your insurance policy coverage and your rights is essential to know what expectations you should have regarding the payout of a claim, and especially before challenging one. Having an insurance company that refuses to pay an auto claim or for repairs is a troubling possibility, but you should now know some of the keys to understanding this process and how to protect yourself.
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