In 2022, nearly 215 million Americans held car insurance, translating to millions of yearly claims [1]. However, not every car insurance claim is paid out. Insurance companies deny claims for many reasons, like a lack of coverage or misrepresenting a claim.
If an insurance company denies your car accident claim, you can appeal their decision, and a car accident attorney can help. Legal action can ensure insurance companies negotiate in good faith and improve your chances of a fair settlement.
Coverage Types and Limits of Car Insurance Policies
Knowing the different types of car insurance policies and their coverage limits is essential to understanding a claim denial.
Liability insurance is the most common type of car insurance and is mandatory in many states. This insurance claim is made against your policy by other drivers or passengers injured in the accident. It does not cover your injuries.
Liability insurance includes bodily injury coverage, which pays the medical bills of others hurt in the accident, and property damage, which will pay for vehicle repairs for the other vehicle. You can claim liability against the other party’s insurance if you’re injured in a car accident.
The minimum liability insurance for most policies is $25,000 per accident per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 per accident for property damage [2]. You can buy more coverage if you’re concerned about paying out of pocket for accidents.
In some states, you also must have uninsured and underinsured motorist coverage, which will pay for your injuries if you get into an accident with someone who doesn’t have insurance. No-fault states will have Personal Injury Protection (PIP) for medical bills. In these states, everyone makes claims against their insurance.
About 75% of Americans have collision coverage and liability insurance [3]. Collision coverage will pay for repairs to your vehicle after an accident, regardless of who was at fault. The typical policy limit settlement is the actual cash value of your car minus depreciation [4].
In addition to collision and liability coverage, around 79% of Americans also have comprehensive insurance coverage [5].
This policy will pay for non-crash damage to your car, like theft, acts of nature, or hitting an animal. Comprehensive coverage does not pay for injuries to yourself or anyone else, only vehicle repair costs. Like collision coverage, comprehensive coverage will be based on your car’s value.
Policy Exclusions
When you purchase car insurance, you will receive a statement of your benefits that explains all policy exclusions. Every insurance policy has different exclusions, but common ones include intentional damage, using the vehicle for illegal activities like street racing, or damage from normal wear and tear.
The type of insurance coverage you have will also determine the policy exclusions. Collision coverage excludes theft, vandalism, fires, or collisions with animals. However, those are typically covered by a comprehensive insurance policy.
Common Reasons for Claim Denial by an Insurance Company
While car insurance exists to cover damage to your vehicle, this doesn’t mean every claim will be filled. The car insurance company can deny claims not covered by your purchased policy. Common reasons for a car insurance claim denial include the following.
Lack of Coverage
The insurance company must tell you everything that is and isn’t covered by your policy. If you make a car insurance claim for flooding but don’t have a comprehensive insurance policy, your claim will be denied.
Policy Lapse or Cancellation
Your policy needs to be active at the time of the car accident. If you forget to renew and then try to submit an auto insurance claim, the car insurance provider will deny the claim.
Similarly, you can’t make insurance claims after you cancel your policy. For example, assume you switched to a new insurance company because the premiums were too high. You canceled your current auto insurance policy, but the new one hasn’t started yet. If you get into an accident during this time, your old insurance carrier and your new one will deny your claim.
Misrepresentation or Fraud
A car insurance company denies claims that are not supported by sufficient evidence.
For example, if you make car insurance claims stating that you were seriously injured, but evidence shows you didn’t seek medical attention for weeks after the accident, the auto insurance company can deny your claim. If you state that you had a significant financial burden from lost wages but were going to work, you may get nothing.
Violation of Policy Terms
Auto insurers can deny claims not meeting their policy terms, including not having commercial vehicle insurance on a company car. This is a serious problem for anyone who gets into car accidents while using their vehicle for commercial purposes, like gig work.
Failure to Cooperate With the Investigation
You must be honest about the facts of the car accident when speaking to the police and insurance adjuster, who will both gather evidence to understand who was responsible for the crash. Refusing to answer questions from insurance adjusters can lead to a denied claim, as the adjuster will state that they didn’t have enough information to determine liability.
Disputed Liability
Insurance policies provide financial protection to car accident victims, but who was to blame and how this matches the specific policy must be clear. Car accident claims for liability insurance require proof that the victim was not primarily to blame for their injuries.
To reduce the risk of disputed liability, you should always document an accident as much as possible. Calling the police, seeking medical attention, gathering evidence at the scene, and getting contact details for witnesses can all be used by a lawyer to support your personal injury case.
Determining Fault in an Accident
During the claims process, an adjuster from the insurance company will review evidence to determine the at-fault party. This evidence can include police reports, medical records, vehicle damage records, surveillance footage, and witness statements.
Sometimes, it’s unclear who is responsible, leading to denied claims even for a legitimate accident. Such a situation can happen if no one calls the police, if the accident occurs in a rural area, or if there are no witnesses other than the drivers.
A car accident lawyer can help prove you were not liable in these cases. For example, they can use expert opinions from doctors who explain how your injuries can be explained by someone hitting your car, not the other way around.
Comparative Negligence
You do not always need to be entirely blameless to recover money for a personal injury claim. Many states use comparative negligence, meaning everyone in the accident receives a percentage of the blame.
Depending on state laws, those seeking compensation may need to be less than 50% responsible, or they may be able to make a claim regardless of their level of blame.
However, the insurance company will reduce your payout based on your negligence. For example, if you are considered 15% responsible, your settlement will be reduced by 15%. This is another reason why having a personal injury lawyer is helpful, as an attorney will ensure insurance companies act reasonably when assigning blame.
What to Do After a Denied Car Insurance Claim
If car insurance denies your claim, you can go through an appeals process, which asks the company to take a second look and reconsider their decision. To combat a claim denial, you will need evidence and legal assistance.
Review the Denial Letter
If the car insurance company denies your claim, they will send you a claim denial letter that explains why they believe they don’t have to pay. This can include reasons like lack of evidence, misrepresenting the accident, or policy exclusions. You can use this letter to identify what further evidence you need.
The letter should also explain the appeals process, such as what information you should submit and where to send your evidence. Bring this to your attorney to develop an appeal letter.
Gather Supporting Evidence
Next, you must gather additional evidence to support your insurance claim. This can include medical expenses, medical reports, police reports, and witness statements. If you have extra photos of the accident or vehicle repair reports, these can support your claim. Include the policy information, which you can use to demonstrate why your evidence fits the policy.
Appeal the Decision
The claim denial letter will provide you with directions on how to submit an appeal. You will write an appeal letter to the insurance company explaining why you feel the claim denial is wrong. This should be supported by the evidence you provide and the language from the policy itself.
A Chicago car insurance claim attorney from our team can help you write a convincing appeal letter, deciphering the policy language and showing how each piece of evidence fits the conditions.
Once the insurance company receives your appeal letter, they will review the case and either issue a second denial or offer you a settlement. This begins the negotiation process, where you and your attorney submit counteroffers until both parties are satisfied with the settlement.
In some cases, the insurance company will undervalue your case and refuse to offer a reasonable amount, in which case you can file a personal injury lawsuit. You and the insurance company will present your evidence to a judge and jury using evidence like medical records, policy information, and eyewitness testimony.
The jury will decide who was responsible for the accident and what damages you’re entitled to. These may include damages different from those available from an insurance settlement, including non-economic damages like pain and suffering or emotional distress. However, if the jury decides against you, you will receive nothing.
Seek Legal Assistance
Appealing an insurance denial can be complicated, so working with a car accident lawyer can give you a better chance of receiving a settlement. Insurance companies use a variety of tactics to avoid paying claims, including undervaluing your claim, insisting you were primarily responsible for the accident, or claiming your injuries were due to a pre-existing condition.
Lawyers understand these tactics and can counter them with the evidence gathered during their investigation.
Personal injury firms are familiar with typical settlements for car accidents like yours and will ensure that the insurance company does not undervalue your claim.
They will partner with expert witnesses who can testify about how the accident happened and how your injuries match the evidence. Additionally, lawyers can estimate what future medical care you may need and ensure this is included in a settlement.
A lawyer can help if the insurance company acted in bad faith. These bad faith practices include misrepresenting a policy, not investigating thoroughly enough, causing unreasonable delays, or failing to disclose an active policy.
An attorney can notify the state’s insurance department and pursue a case. The state insurance department will investigate the claim themselves, and they may force the company to pay your claim if they find that the company acted in bad faith when denying it.
Secure Expert Legal Representation!
An insurance company can deny a claim that doesn’t match their policy, but a denied claim isn’t the end of the road for car accident victims. When car insurance denies your claim, an attorney can guide you through the appeals process and ensure that insurance companies pay their fair share for an accident.
Rosenfeld Injury Lawyers is a nationally recognized Chicago personal injury law firm that has recovered millions in damages for our clients. Our lawyers are highly skilled in negotiation with insurance companies and will protect your legal rights throughout the claims process, ensuring you have the best chance at compensation.
We also work on a contingency fee basis, meaning our legal fees are deducted from your settlement. You owe us nothing unless we win your case. To schedule your free case review with a Chicago auto accident lawyer, call us today at (888) 424-5757 or use our online contact form.
References: [1] Bankrate, [2] Progressive Insurance, [3] Forbes, [4] Allstate Insurance, [5] Forbes