Why are so many claims denied? Common reasons and trends
Needing to file an auto insurance claim is never fun, and claim denial is salt in the wound. A recent study by Anidjar & Levin has revealed the three U.S. states with the highest volume of insurance claim denials, common reasons for denials, and concrete advice to help drivers avoid these instances.
The study found that 5-15% of car insurance claims are denied annually, with California leading the way at 4,800 complaints. However, higher instances of denial aren’t the only challenges Californians face during the claims process, as delayed payments and contentious settlements are also common. Texas had the second-highest rate of auto insurance denials, with 4,200 complaints, compounded by issues with claim handling and low settlement offers. Florida came in third with 3,800 complaints of claim denials. Fraud, uninsured drivers, and delayed settlements are reported as common within the Sunshine State.
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An Anidjar & Levine Law Firm spokesperson said: “The study identified several common reasons for these denials, including insufficient or inaccurate information, policy lapses, exclusions, late reporting of accidents, disputes over fault, and inadequate coverage. These issues can be avoided through careful attention to policy details, timely reporting, and thorough documentation. Your auto insurance policy is designed to act as a safety net after an accident, providing financial protection and peace of mind in times of need. However, with the increasing number of denied claims in Florida, this safety net no longer seems to hold as securely as it should.”
Actionable steps drivers can take to protect themselves from claim denial
Some drivers can face claim denial because they didn’t make timely premium payments, which autopay can help solve. You should also review your policy’s exclusions to ensure coverage for your use of the vehicle. For example, a claim may be denied if someone not on your policy is driving at the time of an incident. You’ll also want to read your policy to identify potential violations that could result in denial, such as breaking traffic laws. If an incident occurs, provide accurate and complete information, including any relevant details about the accident and any damage. Supporting documentation can consist of photos, police reports, witness statements, and repair estimates. It’s also best to disclose the event as quickly as possible, ideally within 24 hours, to avoid denial through late reporting.
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Final thoughts
California, Texas, and Florida comprised the top three U.S. states with the most claim denial complaints, followed by the remaining seven states, listed in order from most to least: New York, Illinois, Pennsylvania, Georgia, Michigan, Ohio, and North Carolina. A few of the most common reasons for denial were fraud, uninsured drivers, policy lapses, and coverage disputes. Drivers can mitigate the chances of denial by reviewing their policy, providing thorough documentation to support a claim, filing promptly, setting up automatic premium payments, and following traffic laws. Keep your insurer updated on any changes, such as additional drivers, and double-check claims forms for accuracy and completion. If your claim is denied, you can request a written explanation of the decision and appeal.