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Can Auto Insurance Deny a Claim? When? Why?


By Makenzie Crutcher on March 25, 2021 in Claims

Filing a claim should be simple. When accidents happen you’re more than likely already tense, so why add additional stress?

We’ll start by answering the big kahuna. Unfortunately, yes, sometimes insurance companies can deny claims. Luckily, it’s not just willy-nilly. There are set reasons, so if you’re aware of these, you can try to avoid this happening to you in the future.

We’ll break down a couple of reasons we compiled from Value Penguin. These are also some of the reasons your insurance may only pay out a portion of your claim.

  • Breaking the Law

Despite having the correct coverage types and limits, if you violated state law during the time the claim happened, your insurer can deny the claim. So, if you hit the road while intoxicated or without a valid driver’s license, you are breaking the law and in turn your insurance company is able to deny your claim.

  • You’re an Excluded Driver

Earlier we explained who in your household you need to include on your policy and why. When you exclude a driver in your household from your car insurance policy, that means the individual is not covered within your limits. It’s important to communicate this exclusion to the driver, so there’s no confusion when it comes to their insurance coverage.

  • Policy Limits

This one addresses the concern of your insurance company only paying out a portion of your claim. If your claim is more than your chosen coverage limits, your insurance company is not responsible for the excess.

Let’s walk through this scenario with an example. Say you live in Illinois where the state minimum for required property damage is $20,000 per accident. In a normal day-to-day situation that should MORE THAN cover you; but if you have terrible luck and get in a fender bender with a Lamborghini Veneno, the $20,000 might not cover the entirety of the claim.

  • Policy Coverage

Auto insurance brings with it a wide variety of coverage options for different situations. So, if you decided to opt-out of an optional coverage and found yourself in a situation where that coverage is the one you would need, the insurance company might not pay out your claim.

We’ll go through another real-life example here. You set up your auto insurance and decide “nah” on comprehensive coverage. In the future, your vehicle is vandalized by someone else’s angry ex who somehow beat up the wrong vehicle. The improbability that this would ever happen not only shocks you but also means the insurance company might not have to pay for the claim if another coverage you have doesn’t cover it.

  • Fraudulent/Late Claim

Honesty is always the best policy. We learned it in Kindergarten, and it’s still relevant today. If for any reason your claim is found to be fraudulent, that’s reason for the insurance company to deny your claim in its entirety. It’s good to be aware of all the details surrounding your claim. Writing these down in your phone notes or a physical notepad can help keep you honest!

Timing can also affect your claim! Be sure to file your claim in a timely manner. If you decide to wait months or years, the claim likely won’t still be valid.

  • Other reasons

This is not an exhaustive list and, ultimately, claim decisions are based off the provisions in your policy.

Two important tips we’d like to give are BE HONEST and ASK QUESTIONS when necessary. You might not be familiar with the claims process and that’s 100% okay. While we can’t speak for other insurance providers, our Say Service Squad and adjusters are here for you – they’re more than happy to walk you through the process so you know what the next steps are.

Overall, staying on top of your insurance and regularly reviewing your coverage could help you avoid a denied claim!

Makenzie Crutcher is the Brand Strategist for Say Insurance. She graduated from Westminster College with a degree in English, emphasis in Literature. Prior to joining Say, Makenzie was an insurance underwriter specializing in policy risk analysis. Having nearly a decade of experience in the insurance industry, she brings a unique perspective to the Say marketing team. Makenzie loves to use her industry expertise and charismatic personality to bring everyone the scoop on Say!