Denied Claim? Here's What to Do Next

Receiving a claim denial letter is frustrating, especially when you're already dealing with the stress of an accident or vehicle damage. But a denial isn't necessarily the final word. Many denied claims are successfully appealed, and understanding your options can make all the difference.

Why Claims Get Denied

Before planning your response, understand why your claim was denied. Common reasons include:

Policy Exclusions

Your policy may specifically exclude the type of damage or situation. For example:

• Mechanical breakdowns (not covered by standard auto insurance)
• Damage from racing or illegal activities
• Commercial use when you have a personal policy
• Intentional damage
• Damage from wear and tear

Coverage Gaps

You might not have the coverage type needed for your claim:

• No collision coverage for a single-vehicle accident
• No comprehensive coverage for theft or weather damage
• Liability-only policy that doesn't cover your own vehicle

Policy Violations

The insurer may allege you violated policy terms:

• Unlisted driver was operating the vehicle
• Lapsed coverage at the time of the incident
• Misrepresentation on your application
• Failure to report the accident promptly

Disputed Facts

The insurer may dispute what happened:

• Fault determination differs from your account
• Questions about whether damage is from the claimed incident
• Suspicion of fraud or exaggeration

Immediate Steps After a Denial

1. Stay Calm and Document

Don't panic or respond emotionally. Instead:

• Keep a copy of the denial letter
• Note the date you received it
• Record the name of anyone you speak with about the claim
• Keep notes of all conversations, including dates and what was discussed

2. Review Your Policy

Pull out your policy documents and read the relevant sections carefully:

• Check the coverage types you have
• Read the exclusions section
• Review the conditions and requirements
• Look at the claims procedures section

Compare what your policy says to the reason given for denial. Sometimes insurers make mistakes or misinterpret policy language.

3. Gather Your Evidence

Collect everything related to your claim:

• Photos from the accident scene
• Police reports
• Witness statements and contact information
• Medical records if injuries are involved
• Repair estimates
• Any correspondence with the insurance company

How to Appeal the Denial

Internal Appeal Process

Most insurance companies have a formal appeals process. Here's how to use it effectively:

Request an Appeal: Contact your insurer and ask to formally appeal the decision. Get details on their appeals process, including deadlines and where to send your appeal.

Write a Clear Appeal Letter: Your letter should include:

• Your policy number and claim number
• Date of the incident and denial
• A clear statement that you're appealing
• Why you believe the denial was wrong
• References to specific policy language supporting your position
• Any new evidence or information
• What outcome you're requesting

Include Supporting Documentation: Attach copies of relevant documents—photos, reports, estimates, and anything else that supports your case.

Send It Properly: Send your appeal via certified mail with return receipt requested. This creates a record that the insurer received it.

Escalating Within the Company

If your initial appeal is denied:

• Ask to speak with a supervisor or claims manager
• Request a review by a different adjuster
• Ask about additional levels of internal review

External Options If Internal Appeals Fail

Contact Your State Insurance Department

Every state has a department that regulates insurance companies. They can:

• Review your complaint
• Investigate whether the insurer followed proper procedures
• Mediate between you and the insurer
• Take action against insurers who violate regulations

Filing a complaint is free and can be done online in most states. Even if the department can't force a specific outcome, insurers often take state complaints seriously.

Hire a Public Adjuster

Public adjusters are licensed professionals who work for policyholders, not insurance companies. They can:

• Review your policy and the denial
• Document and present your claim professionally
• Negotiate with the insurance company on your behalf

Public adjusters typically work on a percentage of the claim settlement, usually 10-15%. They're most useful for larger claims where their fee is justified by a better outcome.

Consult an Attorney

For significant claims or clear bad faith by the insurer, an attorney may be worthwhile:

• Many offer free initial consultations
• Some work on contingency (no fee unless you win)
• They can identify if the insurer acted in bad faith
• Legal action becomes leverage for settlement

Look for attorneys who specialize in insurance disputes or bad faith claims.

When a Denial Might Be Correct

Sometimes claims are legitimately not covered. A denial might be appropriate if:

• The damage type isn't covered by any of your coverages
• You genuinely violated policy terms
• Coverage had lapsed before the incident
• The policy clearly excludes the situation

If you review your policy and realize the denial is correct, focus on preventing similar situations in the future. Consider adjusting your coverage to avoid future gaps.

Preventing Future Denials

Once you've resolved this situation, take steps to prevent future claim problems:

Understand Your Coverage: Know what your policy covers and doesn't cover. Review it annually.

Keep Your Policy Current: Update your insurer about new drivers, vehicles, address changes, and changes in how you use your vehicle.

Document Everything: After any incident, take photos, get witness information, and file a police report when appropriate.

Report Claims Promptly: Most policies require prompt notification. Report incidents quickly, even if you're not sure you'll file a claim.

Be Accurate: Provide truthful information on applications and claims. Misrepresentations can void coverage.

Moving Forward

A claim denial is stressful, but it's not necessarily the end of the road. Many denials are overturned through appeals, especially when policyholders understand their rights and present their case effectively.

Take time to understand why your claim was denied, gather your evidence, and follow the proper channels for appeal. Whether your claim is ultimately paid or not, the experience will make you a more informed policyholder going forward.