Auto insurance is a mandated coverage by most states in the United States. Apart from providing protection in case of accident, the increasing theft of auto parts also emphasizes the importance of obtaining appropriate and comprehensive auto insurance. Over 932,329 items were reported stolen in 2021, a 17% increase from 2019. An insurance information institute report stated that this number has risen by 7% from 2021 up to 1,001,967 in 2022.
Auto insurance policies protect the owner if their vehicle is stolen, has damaged someone’s property, or was involved in injuring someone severely. However, the claims raised are rejected multiple times for a variety of reasons. Before approving an insurance claim, insurance companies conduct a thorough investigation to understand the background of the matter at hand.
Here are a few reasons why your auto insurance claim might be rejected by your insurance provider.
Insurance fraud accrues over $308 billion in losses for American insurance companies, and by extension to consumers, each year. Insurance companies are often fighting a losing battle against fraudulent claims. Among the most typical fraudulent claims are those for pre-existing damage, false bills, or self-inflicted damage.
Consider this; 8,898 cars were purposefully set on fire in 2020, involving a severe case of self-damage to obtain benefits. Insurance companies have the option to report the person for filing a fraud claim in addition to denying or rejecting the claim, which could result in fines, a criminal record, or judicial custody.
A lapsed policy basically means a previously taken auto insurance policy for which a person has neglected to make the required premium payment in time for renewal. In such circumstances, the person is not eligible to make a claim for any accidents that occur after the policy has expired.
Most of the time, people do not receive communication because they disregard letters or reminders delivered by their insurance companies. To avoid this, it is critical to monitor your policies and make premium payments on time to avoid losing the advantages of having auto insurance.
Insurance companies frequently monitor reckless driving habits and the history of claims of individuals who are taking auto insurance policies from them. This gives them an accurate assessment of how higher the premiums should be for these individuals since these people may be more likely to file a damage claim.
Let us use Jessica as an example, who is infamous for being a poor driver and driving very recklessly. She experiences an accident and submits a claim. The insurance provider learns that Jessica was at fault and that the accident occurred because of poor driving. In this situation, the insurance provider is free to reject the claim and prevent Jessica from obtaining additional auto insurance, as this is how insurance companies manage their business risk.
This is yet another problem that causes people to have their claims denied. Every insurance policy has a set amount of coverage that cannot be increased if an accident causes additional damage. For instance, if your car is stolen and is worth more than $80,000, but your insurance coverage is only between $25,000 and $30,000, you are only entitled to the money from your policy that falls within that range.
Consequently, it is crucial to purchase an insurance policy that covers your car according to its value. This can be accomplished by having your insurance company evaluate your car model, your driving history, and the location in which you drive. After this, they can recommend the best policy to protect against unanticipated accidents or mishaps.
Every insurance provider specifies a window during which you can submit a damage report. In many instances, the claim is rejected because the person filed it much later than necessary. You might not have all the necessary paperwork when you report the damage, but you can gather it later in the evaluation process.
The intimation must be timely and you should connect with your insurance provider as soon as an accident or damage occurs. Please check with your provider for the specific timeframe, as each insurance company has a different policy regarding the deadline for you to file a claim for damage after an accident occurs.
When a minor or someone who is not covered by the insurance policy is operating the vehicle, that is another significant factor that may result in the rejection of claims. Additionally, claims made by a company that uses a personal vehicle for business purposes are disallowed due to legal concerns. Other legal issues can include operating a vehicle without a valid license or providing inaccurate information to the insurance company, both of which are crimes that may be prosecuted in court.
It is crucial to be aware of all these factors and to avoid engaging in any fraudulent activity that can be categorized as fraud against the insurance company. If you decide to purchase an insurance policy in the future without much due diligence, you should be prepared for the fact that you could be liable to pay higher premiums or getting no insurance at all.
Therefore, Gonzalez Insurance always advises clients on the proper dos and don’ts when purchasing auto insurance and making claims. Contact us to receive a thorough portfolio analysis and a quote for personalized auto insurance.