When can a car insurance company deny a claim?
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UPDATED: Mar 18, 2019
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Insurance is something most people do not like when they have to pay for it but are eternally grateful for when it pays for costly damages, a stolen car, or accident-related injuries after an accident.
Filing a claim for an accident or damages can add more stress to an already difficult time, so most car insurance companies do their best to streamline and expedite the whole process so their customers are made whole again as soon as possible.
What is a car insurance claim?
An insurance claim is essentially a report made to an insurance company after an accident. It is a request from the insured to get reimbursement for damage or losses that have been incurred under the policy terms.
An insurance company will require some kind of proof that damage or injury has been sustained before paying any money out. It will look at the claim from five different angles to determine the claim’s validity.
What the customer, or claimant, tells the insurer; what the other driver says, the police report, any witness statements and physical damage documented at the scene of the accident.
Making a Claim
Most large insurance companies have a website that allows customers to report claims online. This allows claims to be reported any time of the day or night, and claims can also be reported over the telephone.
Larger insurers typically have call centers that are available to take claim information over the phone 24 hours a day, seven days a week.
Customers can also usually walk into an office and work with an agent in person to report their claim. Beware that if the proper claim filing procedure is not followed the claim can be denied. The procedure is usually stated in the policy.
Learn more about How to File a Car Insurance Claim
Insurance companies do not want to pay out any more money than is necessary. This is good news, since the more they pay out, the higher rates customers will ultimately have to pay for coverage. They investigate each claim to verify whether it is covered under the driver’s policy, as well as whether the claim is valid.
A claims adjuster will be assigned to the customer’s case, and may want to speak with the customer. They may also want to speak with the other person that was involved in the accident.
Other things the adjuster may look at are the customer’s car, the other driver’s car, and the police report if one exists. The claims adjuster will take the customer through the process of getting the vehicle repairs estimated, completed and paid for.
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Insurance Fraud and Fraudulent Claims
Fraudulent claims are an unfortunate part of the insurance business. They have been happening ever since the first insurance company was in business, and today make up a substantial part of insurance companies’ claims, costing them billions of dollars each year.
Fraud happens with all types of insurance, and can range from slight exaggerations, to persons claiming injuries and the need for medical reimbursement when they have never even seen a doctor, to staged accidents or injuries.
There are many complex schemes that have been used, varying in their degree of severity.
There is what is known as hard fraud, when a person deliberately sets up a scenario such as a car theft or accident for a vehicle that is covered by their insurance company. Criminal rings can be involved in this, stealing millions of dollars’ worth of policy payments from honest customers.
Soft, or opportunistic fraud, is far more common and typically happens when a driver gets into an accident, then claims far more damage than what took place. Fraudulent accidents and other claims cost insurers money, and these are dollars that could be spent lowering rates for customers.
The Insurance Research Council estimates that approximately 20 to 30 percent of claims contain at least some fraudulent element, and insurance companies will deny any claim that they suspect has fraudulent activity involved.
When can an Insurance Claim be Denied
Even when a claim seems valid it can be denied for certain reasons. Making misleading or false statements when signing the original policy, or failing to tell insurer of a change in residence, or changing of other relevant information can affect risk levels, which affects insurance rates and will cause a denial.
When a claim is made, the first thing insurers do is check the limits of the customer’s coverage. There are specific dollar-amount limits for each type of coverage, as well as strict rules about the types of damages that are covered.
For example, if a tree branch falls on a car during a storm, this is covered as a force of nature. If the tree branch falls on the car because the homeowner was cutting the tree and didn’t move their car, this would not be covered.
Sometimes claims get denied for reasons of simple oversight, such as making an uninsured motorist claim when the other party turns out to have insurance.
Another example is when a person is not on a policy, such as a teenager driver who got into an accident while driving her parents’ car when they did not expect her to and had excluded her from their insurance policy.
Claims can also be denied when the amount of damages exceeds the limits of an insured’s policy, or if a person bought a new car and did not add it to his policy within the specified time stated in his policy.
Additionally, if a car has not been kept where the policyholder said it would be when they purchased the policy and premiums were calculated, the claim could be denied.
Finding affordable insurance helps drivers carry the right amount of coverage so they can have the maximum amount of protection and reduce the chance of a denied claim or non-covered damages.
Doing business with high-quality insurance companies also increases the odds of having claims paid promptly.