What to do if your car insurance will not pay for a claim?


As long as your insurance claim is covered by the policy and is reasonable, the insurance company should be paying your claim. However, there may be instances where there is a dispute about your claim. For instance,

  • An at-fault driver's insurance company may contest the fact that their client is the one at-fault. They may push for a 50/50 situation where both you and the other driver have the same degree of responsibility for the car accident.
  • An insurance company may deny the claim stating that the circumstances surrounding the claim is not covered by the policy (for instance, if an excluded (and unlicensed) teenager "borrows" your car for a spin, the insurance company will not pay for the damage or the liability incurred.

When your claim is denied, you should:

  • Check your policy's terms and conditions first.

    The incident that necessitated the claim may actually be excluded from the policy - and you have no other recourse but to accept the insurance company's denial. However, there may be areas which you feel that the incident is and should actually be covered.  Then, you go to the next step.

  • Collect supporting documents that will bolster your claim.

    Aside from a police report, get pictures of the incident and statements from witnesses. If you believe you are not at fault but the at-fault driver's insurance company is contesting this, you need to show documentation that will make your case stronger.

    Also, you should keep the letters of the claims denial, as well as instances of contact with the insurance company. When calling the insurance company to follow up, list down who you talked to and what was discussed during your conversation.

  • Get aid from the insurance commission of your state or the Insurance information Institute via their hotline.

    They will help you thresh out your rights as a client of an insurance company. They will also help by providing arbitrators. The arbitrator will listen both you and the insurance company and will try to resolve the dispute.

  • If, after the arbitration, you are still unsatisfied with the result, then you can file a lawsuit.

    You should hire a lawyer to represent you. You can try to get a lawyer on a contingency basis, meaning, the lawyer will only be paid if your claim is also paid. A lawsuit is usually the last resort (and one we don't recommend) as this is a tedious and often expensive process.

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