How to Fight an Auto Insurance Claim Denial

When you decide to fight an “auto insurance claim denial,” you should begin with a clear understanding of the circumstances. If you already know that a “denial” is an insurance company’s refusal to pay a presented claim, that’s a good start, but it’s a little more complicated than that.

“Denial” is a simple catch-all layman’s term, but an insurance claims professional will use words more specific to your situation. Your battle for payment of your damages will depend on the facts of your case and the explanation of why they “denied” your claim in the first place.

– Fighting a denial of liability

You may receive a liability denial when you present a claim against another person’s auto liability policy. Even if you know for certain that the other driver was at fault, an insurance company has the right to investigate the accident and come to their own conclusion. They may decide that their insured is not at fault and issue a denial of liability to you. There are several ways to fight it.

– Get it in writin

Sometimes a denial of liability is due to a misunderstanding of the facts. Perhaps the claims representative missed an impartial witness. Maybe a photo of the post-accident scene would have helped. Whatever the case, you can’t dispute facts you don’t know about; so ask for a review of the liability issues in writing.

Read the liability denial, then consider the accuracy of the details. Offer any relevant additional information you have, then ask the company to reconsider their decision. If they need more information to reevaluate your claim, give it to them.

– File a claim with your own insurance company

The easiest way to fight a liability denial is to file your collision claim with your own insurance company. They will pay you asap and subrogate against the other driver to collect the money they paid, plus your deductible. If the other driver is uninsured, the subrogation specialist may get a judgment, put a lien on the other guy’s property, take his license or garnish his wages to accomplish that. For more information on the subrogation process, see “The right of subrogation explained”

– File a suit

For major vehicle damage and/or injuries, consult an experienced attorney about filing a suit in the local court system. Bear in mind that lawsuits can be complicated, expensive and time consuming. You may or may not win; and if you do, the attorney will get a chunk out of any money you receive.

– File a small claim suit

If the dollar value is small enough to meet local guidelines, for the cost of a filing fee, you could opt for a DIY suit in small claims court. But remember, even small claims courts get backlogged, and a defendant’s extension requests could have your case lingering for months. Check the chart on the Law for All website for a list of state’s small claims dollar limits.

– Use dispute resolution

Many insurance companies are signatory members of Arbitration Forums with a standing agreement to arbitrate disputes instead of filing suit. Some courts also mandate arbitration or mediation to resolve disputes out of court. You may be able to settle your case via a similar private program of facilitated negotiation.

* Fighting a denial of coverage

If your own insurance company turns down a claim for vehicle damage or bodily injury because of coverage issues, it’s actually called a “declination of coverage.” One simple example is an accident that occurs the day after an auto policy expires.

Coverage issues can be a lot more complicated than a simple expiration date dispute. Complicated technical and legal issues can sometimes lead to faulty coverage decisions, so if you feel a declination of coverage was in error, there are ways to fight it.

– Get a declination letter

Insurance companies are held to high standards when it comes to issuing declinations of coverage to policyholders; a declination must be timely. It should be in writing with a review of coverage issues and accident details. The letter should tell you exactly why they declined coverage, in wording you can understand. If a company doesn’t send a formal letter, ask for one.

– Submit more information 

Sometimes a declination of coverage is just a matter of a claims person getting the wrong information on a car, date of accident or driver. Read the declination letter, then check your policy and the accident facts to make sure they are using accurate information.

– You may be required to arbitrate

An insurance policy is a personal contract. They often have mandatory arbitration provisions. As you gear up for a fight with your own insurance company, make sure you are complying with policy provisions that may require arbitration.

– Contact the insurance commissioner

If you feel a formal decision on your accident is taking too long, and if you feel a liability denial or coverage declination is unfair or in bad faith, then contact your state’s Department of Insurance.

State insurance departments govern insurance companies. They issue underwriting and claim compliance guidelines, and accept consumer complaints. State departments follow up with insurance company management and can turn your claim into a squeaky wheel that gets the attention it deserves. But if you’re complaining about your own insurance company, read your policy first. It usually will require that you comply with all policy provisions before filing any outside complaint, and that usually means arbitration.

The National Association of Insurance Commissioners has links to all state departments.