A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 14, 2021

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Important facts to know...

  • Insurance companies are allowed to deny claims, providing the reason is valid
  • A car insurance company cannot delay your claim unnecessarily or deny you in bad faith
  • You can always appeal a car insurance claim denial
  • If you dislike the way your car insurance company handled your claim, you can use a car insurance comparison tool to find a new policy and insurance company

After years of paying car insurance premiums, you got into an auto accident. You called your insurance company, filed the claim, and provided all the requested paperwork. After waiting anywhere from a few days to a few weeks, you received your claim response in the mail.

To your horror, your car insurance company denied your claim. At this point, you may be wondering what to do next.

First, you should appeal the denial. Then, you should consider finding an auto insurance carrier with better customer service. To accomplish this, you can use a comparison tool to quickly find a new car insurance company and policy.

Try our FREE online quote tool and start comparing auto insurance rates! Enter your ZIP code above!

The Claims Process

In order to understand your denial and how to appeal the denial, it is important to educate yourself on the claims process.

Most states, like Illinois, outline the claims process and what insurance companies are supposed to do after you file a claim.

Once your claim is filed, the insurance companies involved will attempt to determine what happened and which driver caused the accident.

In Illinois and a few other states, fault can be assigned as a percentage, meaning one driver may not be 100 percent responsible for causing the accident. Instead, one driver may be 60 percent responsible, and the other driver may be 40 percent responsible.

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What Happens if Fault Is Assigned as a Percentage

When fault is assigned as a percentage, the driver who is 51 percent or greater at fault in the accident does not receive any compensation.

In the Illinois example, the driver who was determined to be 40 percent responsible can receive funds for damages, but the insurance company may only offer to pay 60 percent of the accident-related expenses, which would leave the driver responsible for 40 percent of the costs.

The driver who was found to be 60 percent responsible would not be eligible for any compensation unless they had collision insurance, which pays for the policy holder’s damages minus any applicable fees and deductibles.

Neither of these scenarios is perfect, and if you disagree with the amount offered by the insurance company or the denial of your claim, you can appeal.

If you are dissatisfied with the way your current insurance company handled your claim, you can always find a new policy with a different carrier by using a car insurance comparison tool.

First Thing to Do When Your Car Insurance Company Denies Your Claim

If you receive a letter from your car insurance company denying your claim, don’t panic. Instead, you need to determine the exact reason for the denial of your claim or the low financial offer.

To accomplish this task, you need to read the denial letter. Specifically, you need to locate the reason(s) for the denial.

If the reason was that the incident is specifically excluded, the driver was not listed on the policy, or your policy was canceled, you may not have a valid reason to appeal.

Of course, you can appeal if:

  • The driver was listed
  • Your policy was paid on time
  • The way the accident happened was not specifically excluded
  • You believe your insurance company is operating in bad faith

Next Steps to Take When Your Claim for Compensation after an Accident Is Denied

If you suspect the reason your car insurance company used was incorrect or you think your insurance company is operating in bad faith, you can talk to a representative of your insurance company and file an appeal.

  • Call Your Insurance Agent – Once you understand why your claim was denied, write down any and all questions you may have and call your agent. Ask them every question on your list and write down your agent’s answers. Then double-check those answers against your policy and the insurance laws of your state.
  • Gather Your Evidence – Take the time to gather any additional evidence that proves your case, including additional witness statements, police reports, and any images of the damage to your car and the accident scene.
  • Follow Any Procedures as Outlined in the Letter – If the denial letter lists any steps to take to appeal the denial, follow those steps precisely. Failure to follow the specific steps may result in continued denials of your car insurance claim.
  • Write and Mail the Appeal Letter – Lastly, write and mail the appeal letter along with your evidence and any notes you have on your communications with your insurance agent.

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What to Do if You Get Additional Denials

If your car insurance company still denies your claim after you appeal, you have a few choices left. You can get a car accident attorney or let the claim go and repair or replace your vehicle with your own money.

Additionally, if you believe that your car insurance company is operating in bad faith, you can file a report with your state’s department of insurance.

Neither of these options is ideal, and if you are faced with either getting an attorney or abandoning your claim, you may not want to continue to do business with your current insurance company.

Thankfully, you are always free to shop for new car insurance, even if you are suing your current insurance company due to a bad faith claim’s denial.

Finding a New Insurance Company After a Claims Denial

You do not have to continue to do business with a car insurance company that does not meet your needs. Whether you sue your auto insurance company or forego pursuing the claim further, you can find another car insurance policy with a different insurance company.

To find another car insurance company and potentially save money on your next policy, use an auto insurance comparison tool. These tools are designed to search through all the available insurance policies in your area and return the results that best match your criteria.

Once you have the results of the search, all you have to choose is the policy that best matches your budget and driving habits. After you purchase, don’t forget to print your new policy’s information and make sure it’s valid before canceling your old coverage.

Start comparison shopping today by using our FREE online quote tool! Enter your ZIP code below to compare auto insurance rates!