Why Car Accident Insurance Claims Are Denied

Car insurance companies sometimes deny or underpay claims. Learn more about why claims are denied and how you can fight back.

Updated by , Attorney · UC Law San Francisco

Car insurance is required for drivers in almost every state. Most drivers and car owners buy car insurance not only to comply with the law, but also because they think it offers some protection against potentially catastrophic expenses.

After an accident, you might make a claim with your own insurer (a "first-party claim") or someone else's (a "third-party claim"). No matter which company you're dealing with, you'll probably be frustrated if the company denies or tries to underpay your claim. This is especially true when your own insurer denies your claim after you've paid monthly premiums, often for years or even decades.

In this article, we'll breakdown:

  • reasons why claims are denied or unpaid
  • how to respond when your claim is denied, and
  • what to do when you think an insurance adjuster is acting in bad faith.

Reasons Why Claims Are Denied or Underpaid

Car accidents are stressful. You might be injured yourself. You might feel responsible for injuring someone else—a passenger, pedestrian, or another driver. You might be worried about how you're going to get to work while your car is in the shop. The last thing you need is to haggle with insurance adjusters.

When an adjuster denies part or all of your claim, you need to understand why. Common disputes include:

  • Coverage. Was the person who caused the accident covered by the policy?
  • Liability. Who was at fault for the car accident? Do you share blame for the accident?
  • Delayed Filing. Was the claim filed within the time limits set by the policy? (Third-party claims typically have no time limits. First-party claims might, but insurers usually have to show that your delay in filing negatively affected (prejudiced) the company's ability to investigate the claim.)
  • Delay in treatment. Did you seek medical treatment right away or wait weeks or months to see a doctor? Do you have proof of your injuries, like medical records?
  • Preexisting condition. Were you injured on the date of the car accident, or did you have a preexisting injury or health condition unrelated to the accident
  • Policy lapses. Were premiums up to date? Has the policy expired or been terminated by the insurer?
  • Intentional misconduct. Were you driving under the influence of alcohol or drugs? (If so, your insurer might try to deny coverage by claiming that you intentionally got drunk and drove. Learn more about DUI-related accidents and car insurance.)
  • Policy limits. Is your claim for more than the insured's policy limits? (A policy limit is the total amount that an insurer can pay under a particular policy. The amount of coverage required in some states can be pretty low.)

For more about why car insurance companies deny claims, check out: What If My Car Insurance Claim is denied?

What to Do When Your Car Insurance Claim Is Denied

Just because an insurance adjuster denies part or all of your claim, doesn't mean your case is closed. You can consider the insurer's denial as a starting point for negotiations.

First, ask the adjuster to give you a written explanation of the reason for the denial. Ask the adjuster to show you the specific language in the policy that the adjuster is relying on to deny your claim, including policy limits. Also, ask the adjuster to tell you what statutes (laws), rules, or regulations the adjuster is relying on to deny your claim.

If the adjuster refuses to put the reasons for the denial in writing, write your own letter confirming your request and the adjuster's refusal. You might need it if you decide to go above the adjuster's head or to court (see below).

Learn more about how personal injury settlement negotiations work and how to negotiate with your own insurance after an injury.

Bad Faith Denials

Insurance companies have a duty to negotiate and settle first-party and third-party claims in good faith. If an adjuster is ignoring you or using improper settlement tactics, you might be able to argue that the insurer is acting in bad faith. You can:

When to Get Help From a Car Accident Lawyer

Insurance companies are powerful. Most people rarely, if ever, have to make insurance claims. But adjusters handle them all day, every day. If an insurance company is trying to deny or underpay your claim, talk to a lawyer. A lawyer can help protect your interests or relieve you of the burden of dealing with uncooperative insurers.

Learn more about when to hire a lawyer after a car accident and tips on how to find the right lawyer for your case. You can also fill out the form at the top or bottom of this page to connect with a lawyer for free.

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