Why Car Insurance Companies Deny Claims, and What You Can Do About It

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

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

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:

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