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What to Do When Your Car Insurance Claim Is Denied

Posted in Auto Accidents

A car accident could lead to significant out-of-pocket costs. You could spend thousands on medical bills, auto repairs, a rental car and travel expenses. If you took all the correct steps after a car crash and filed a loss claim with the at-fault party’s insurance company, you may assume that will be the end of the case. The insurance company will reimburse your expenses and send a settlement check. You may not know how to proceed, however, if the insurance company denies your claim.

Couple exploring their legal options after a car accident

Why Would an Insurance Company Deny a Claim?

An insurance company must give a reason if it denies your car insurance claim. If you receive a denial letter without an explanation, contact the company to ask for one. Determining the validity of the denial is an important step before you may proceed. Insurance companies may deny valid claims in bad faith, leading to different options than if the insurer has an acceptable reason for the claim rejection.

  • The policyholder is behind on its monthly premiums.
  • It believes its policyholder was not responsible for the accident.
  • You are not a covered party on the policy.
  • You failed to seek immediate medical attention for injuries.
  • Your claim falls outside of the other party’s policy limits.
  • You missed a reporting or filing deadline.
  • You violated the law at the time of the car accident.
  • It believes you misrepresented facts on your claim.

If the reason for the denial is valid and true to the facts of your case, you may need to pursue recovery through another outlet. If you or your car accident lawyer believe the insurance provider denied your claim in bad faith, however, you may be able to bring a civil claim against the insurance company on top of your original damage claim.

Is it Insurance Bad Faith?

Insurance bad faith refers to an insurance company dealing with a claim unfairly, often to save money. Insurance providers may use unjust means to get out of paying claims. Many insurance companies delay payments, draw out investigations and deny valid claims. Bad faith is a tort that could lead to a civil action against the insurance company. If your injury lawyer believes the insurer denied your claim in bad faith, you could file a lawsuit for damages.

A bad faith insurance lawsuit could end in compensation for your original car accident losses as well as additional awards to penalize the insurance company for treating your claim unfairly. A judge or jury may force a bad faith insurance company to pay penalties and interest on top of a reasonable settlement for your initial losses. A successful bad faith lawsuit could also hold the insurance company accountable for its actions and potentially prevent it from doing the same thing to another claimant in the future.

What to Do Next

You have the right to contact the insurance company and discuss the reasons for the denial. You may point out mistakes or provide more evidence that could change the insurance company’s decision. The insurance company may reverse its denial and negotiate a settlement with you. You may also hire a lawyer to help you appeal the insurer’s decision to your state’s insurance commissioner. An appeal asks an unbiased third party to review the case and determine if the insurance company was right or wrong in rejecting the claim. A successful appeal could result in a settlement for your losses.

If your car accident attorney believes you have been the victim of bad faith, he or she can help you file a lawsuit. Your lawyer may need to prove the insurance company violated New Mexico’s insurance code or is guilty of a breach of contract. The insurance company may remedy the situation internally to avoid a trial, resulting in a payout for you. If not, your lawyer may be able to win a bad faith insurance trial to secure you fair compensation. The best thing to do after receiving a car insurance denial after a serious accident is to hire an attorney.

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