Common Reasons Why Car Insurance Claims May Be Denied

May 21, 2018

If you get into a car accident or have some other misfortune with your car, you expect your car insurance to cover the damages. Would it surprise you to learn that this isn’t always the case? There are many reasons that the insurance company may turn you down.

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Keep reading to learn the top reasons claims are turned down and how you can avoid it.

Misunderstanding Your Policy

This is the top reason car insurance claims are denied. Many people just take the coverage their insurance agent offers them without taking the time to understand the policy. Car insurance is not a one-size-fits-all purchase. You want to know exactly what it covers and what the worst-case scenario could be in the face of an accident.

Specifically, you want to ask your insurance agent about your coverage limits for property damage, collision, and comprehensive insurance. Do you have an older car and you canceled comprehensive insurance, keeping just the required liability insurance? This could cost you. Should something unforeseen happen to your car that doesn’t involve another vehicle, you could be out a car and money to pay for it because you didn’t have the comprehensive coverage. This is why it’s important to talk to your agent about what you have and what you should expect financially if something bad happened.

Missing Payments

Missing payments on your car insurance is another big reason claims are denied. Your insurance company has a specific date that they will terminate your policy and they aren’t just trying to fool you. They will cancel it at midnight on the cancellation date if you don’t pay your premiums. This means even if your insurance card says you have coverage until a specific date, you won’t get coverage if you don’t pay your premiums on time.

Breaking the Law

If your accident was a result of you breaking the law, such as driving under the influence of drugs or alcohol, insurance won’t cover the damages. You may also void your insurance if you are driving on a suspended license or violating any other court-issued orders. This does vary by insurance company, but on average, most companies will not cover any incidents that involve breaking the law.

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The Driver Isn’t on the Policy

Car insurance is specific to the car and the person driving it. If you drive someone else’s car and you are not a named driver on the policy, the accident may not be covered. Your insurance premiums are based on the riskiness of each driver. If you let someone else drive your car that has a history of accidents, the insurance company would likely give them a higher premium because of the risk they pose of filing a claim. Unless you are named on the insurance policy for the car you plan to drive, don’t drive it.

Waiting to Report the Accident

Each insurance company differs in the time they allow you to report a claim. Make sure you know that period very well. If you wait too long, the insurance company can deny your claim based on the amount of time that passed. It’s always in your best interest to report the incident right away. Of course, you should take care of the health of anyone involved in the accident and get the police report, but reporting it to your insurance company should definitely come next.

The Fault is Yet to be Determined

The police report usually determines which driver was at fault. If you file a claim that states something other than the police report, there could be a discrepancy which would cause the insurance company to dispute the claim. Until they know beyond a reasonable doubt who was at fault, they will not process the claim.

It’s never a good idea to assume that your car insurance claim will be covered. Make sure you routinely review your insurance and discuss any issues with your insurance agent. As your car ages or you change cars, your car insurance needs change. Stay on top of the necessary changes to make sure that you are always financially protected.

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