We all drive around assuming that everything is covered, but that may not be the case depending on your specific policy. It can be frustrating to get into an accident, file a claim, and then have it denied by your insurance company. Understanding the reasons why auto insurance claims get denied is important. Below are several common reasons.
1 – Fraud
Fraud is a huge issue in the insurance industry and companies are cracking down on them. If your insurance company has reason to believe that your claim is fraudulent in any way, they will deny your claim. Examples of fraud include, but are not limited to:
- Staging an accident.
- Lying or exaggerating the circumstances surrounding an accident.
- Filing a claim for a non-existent accident.
- Claiming false injuries from an accident.
- Claiming damages unrelated to a specific incident.
- Intentionally dumping a vehicle (and claiming it was stolen).
- Filing an injury claim for a pre-existing condition.
- You intentionally caused an accident.
2 – Lack of Coverage
In some cases, you may assume you have certain coverage but actually do not. Not all auto insurance policies are the same. In Massachusetts, there is required minimal coverage for bodily injury to others, personal injury protection, and damage to someone else’s property. All other coverages are optional. So, just because you have an insurance policy doesn’t mean that everything is covered. For instance, if you didn’t purchase collision coverage, you are not protected from damage to your own vehicle. Filing a claim for coverage that you do not have will result in immediate denial of the claim.
3 – Disqualifying Mods
Performance modifications to vehicles are very popular. Unfortunately, they can cause problems when it comes to manufacturer’s warranties and insurance coverage. From the insurance side of things, you must notify your insurance company of the changes made to your vehicle. Your auto insurance policy is based on a particular dollar value based on the vehicle’s make, model, condition and mileage. Often times, mods are more expensive that standard parts. Thus, the value of the policy (and the premium) would need to increase accordingly. For example, if your vehicle has a 10k upgrade to the exhaust system but your insurance company doesn’t know about it, in the case of a total loss, your insurance company may only pay for the standard exhaust since that’s what they agreed to insure. Also be aware that your insurance company may be unwilling to cover certain vehicle modifications.
4 – Missed Payments
If you miss a payment, your policy has technically lapsed and you have no coverage. It doesn’t matter if you paid on time for the last 10 years, are late just a few days, or have a good reason why you are late. Unfortunately, the terms of your policy are very clear. Additionally, there is no guarantee that the company will agree to renew your policy or offer you the same rate as before when you re-apply. Given how important auto insurance is, this is one bill that you should make every effort to pay on-time!
Other Reasons Why Auto Insurance Claims Get Denied
There are many other reasons why auto insurance claims get denied. Here are just a few more examples:
- An unauthorized driver in your household was driving the car.
- You waited too long to report the accident.
- You were driving under the influence of drugs or alcohol.
Again, these are just some examples and are by no means a fully comprehensive list. If you are unsure about your policy, contact your insurance company. They can provide a copy of your policy with detailed information on what is and what is not covered. Don’t wait for an accident to learn about the limits of your policy. Find out ahead of time and purchase additional coverage, as needed.