Is it possible for insurance companies to reject the claims? Yes, insurance firms have 100 percent right to reject the claims if the person filing for a claim fails to abide by the rules and terms laid out by them.
However, insurance companies do not reject claims outright. They follow a structured process when it comes to settling these claims. Note that insurance companies do not guarantee the settlement of all the claims. The terms and conditions of the policies are the major determinants when it comes to fulfilling claims.
Now, let us understand the circumstances under which an insurance firm rejects insurance claims.
Found Guilty for the Accident
The first reason why an insurance company might reject the claim is that they have found you responsible for the accident. This usually happens when the insurance team evaluates your statement and analyzes the physical evidence to learn that you are at fault.
For instance, if the accident occurred when you were using a cell phone while driving or if your car had some unattended mechanical problems which made it unsafe for driving, the insurance company will see it as your fault.
In situations like these, you will have to pay for the damages.
Delay in Reporting the Accident
Notifying the insurance company about the accident within the stipulated time frame is mandatory. The time frame for informing the insurance company is usually 24 to 48 hours. If you fail to notify the insurer on time, there are chances your claim might be rejected.
Ensure that you or other family members get in touch with the insurer immediately to share details of the incident. Also, present the required documentation while raising a claim.
Lapsed Insurance Policy
Another reason why insurance companies might reject the claim could be because of a lapsed policy. Insurance companies reject claims when the policies are not in effect at the time of the accident. By paying the insurance premiums on time, your policy remains active and is eligible for claims.
If you forget to pay the insurance premium, get in touch with the insurance agent immediately. Find out if you have a grace period to pay the premium.
With the help of tools like Microsoft To-do, Any.do, or Google Keep, you can create a task and set a reminder for the same. This will ensure that you pay the premiums on time.
Occurrence of Fraud or False Claims
Lying to the insurance company or making false claims is a big reason for claim rejections.
Insurance works on the principle of trust and loyalty. When you make false claims or lie to the insurance company, this bond of trust is hampered, causing them to reject the claim. Besides, this situation could also land you in legal conflicts.
Always be truthful about the accident with the insurance company and follow the claim filing procedure diligently.
Discovery of Illegal Activity
Breaking the law is also considered one of the valid grounds for insurance claim rejections.
For instance, you have a poor driving history (too many accidents or fines) or use your private car as a commercial taxi without informing the insurance company. These cases are enough for the insurance company to reject your claim.
That is why having a thorough knowledge of the terms and conditions of the policy is necessary.
Insufficient Insurance Coverage
Insurance claims can also be rejected if you do not have sufficient coverage to take care of the damages. In such situations, you can choose to collect the damages directly from the other party who is responsible for the accident. If you opted for an umbrella policy, you can use the same to cover the additional expenses.
Another solution is to pay upfront for the additional damages.
Misleading or Wrong Information
Submitting wrong information or obsolete documents can result in the rejection of claims. For example, submitting incorrect details while purchasing the policy can cause the claims to be rejected or make your policy invalid.
Further, sharing old documentation while filing for claims can also be the reason the insurer rejects the claim. This usually happens in health-related issues that may increase the risk of accidents while driving.
Remember if you are diagnosed with a medical condition that could affect your ability to drive safely, you must be transparent about it with the insurance company. Make sure you submit a certificate from the physician testifying your medical condition and whether it will compromise the driving safely.
Ensure that you carry documents such as vehicle registration documents, PUC, health certificates, insurance documents, and driver’s license with you every time commute in the car.
Uninformed Modifications
Vehicle owners often modify car parts for better looks and performance. For example, mods could include installing LPG or CNG will help you save money on gas, adding bigger wheels to upgrade the look of the car, and others.
Although such modifications improve the performance of your car, they can compromise the security aspect. That is why it is important to notify the insurance company about these modifications. The premium of the insurance could also vary because of these modifications.
Repairing before Inspection
Every vehicle that has been in an accident is inspected by the insurance firm to assess the damage. Depending on the results, the insurance agency confirms the amount for the claims.
When you send your car for repairs before this inspection, the firm cannot determine the amount of damage caused, and thus, the adjustor cannot approve the claim request.
It is ideal to send the car for repairs once the insurance firm completes its inspection.
Drunk or Drugged Driving
Driving under intoxication is an offense. If you are found driving under the influence of alcohol or other intoxicants, then the insurance coverage becomes invalid and insurance companies will not be able to approve the accident claims.
Final Thoughts
An insurance claim might be rejected for all the reasons we’ve mentioned in this post. However, if you pay your premiums on time, abide by the insurance terms, and follow proper traffic guidelines, you don’t have to worry. Also, read your policy documents carefully before buying one for your car. We are sure the information shared above will help you file your claims smartly. Stay safe!
Aliza Vigderman is the director of content at AutoInsurance.com, overseeing all content on the site. Previously, she worked as an industry analyst and senior editor at Security.org, a site covering home and digital security. She has also worked as a freelance writer at SquareFoot, Degreed, and The Huffington Post. Her background is in journalism, which she studied at Brandeis University.
Aliza Vigderman’s piece reads like an advertisement for Insurance companies.
The truth is there are bad insurance companies out there, such as Bristol West to name names, that have a SOP to deny many claims for often absurd and ludicrous reasoning. In addition to that, they have a model which delays resolution and payment for weeks and weeks, if not months on perfectly legitimate and rightful claims they do eventually pay out upon.
You can’t have a top ten list for reasons a claim is denied and not list bad insurance company and/or adjuster/agent assigned to the case. It happens all too often. Talk to people. Ask around. Almost everyone has an auto insurance horror story. I know I have several.