Imagine you’ve been in an accident and submitted your claim to your insurance company, only to find out that it’s been denied. This is the last thing you want to hear after all the emotional and financial distress you’ve been under recently. To ensure that you aren’t put in this situation during the process, it is important to know why a claim could get denied. To learn more about why your car insurance claim could be denied by your auto insurance company, stick around.
Understanding when an auto insurance company might deny a claim
The short answer is yes. Your auto insurance company could have grounds to deny your claim at any time, depending on your insurance company's assessment of the circumstances revolving around your auto accident.
Reasons why your claim is denied
Generally speaking, there are four primary reasons the claim may be denied. Here's a closer look at why:
1. Misrepresentation
It is incredibly important to disclose all crucial information to your insurance provider and to keep them up to date on any changes. This is because insurers have the right to deny a claim if they have reason to believe the information they have is not truthful. An incorrect address could lead to issues with your coverage. An honest forgetting to notify your insurer of an address change would not be grounds for denial of the claim.
However, things like using a friend’s address or rating a vehicle as a “cottage” when it is actually garaged in the city to obtain a better price can result in your claim being denied.
When purchasing your auto insurance policy, make sure that everything documented on your policy is 100 percent accurate. This includes the names of all drivers who operate or use your vehicle, your annual kilometres, any previous damages, and any customization or modifications you have done. If your insurance finds out that you have misrepresented your vehicle in your policy, your claim may be denied.
2. You violated your auto insurance policy conditions
Each Ontario auto insurance policy has a specific set of rules that must be followed, which are called statutory conditions. If you breach one of these rules and your insurance provider finds out, your claims may be denied.
A common violation of a personal auto insurance policy is using the insured vehicle for business or commercial purposes. If you’ve signed up for a personal-use policy, you must only use your car for personal reasons in order to remain covered. The reasoning behind this rule is that vehicles used for commercial purposes are driven on a more frequent basis and cover a lot more kilometres than those used for personal reasons.
Therefore, they have a much higher probability of being involved in an accident and a higher risk score. If you do intend to drive your vehicle for business reasons, please speak to your broker about commercial automobile insurance. It is also important to speak with your broker if you plan to drive your vehicle for a ride-share service, such as Uber or Lyft. This is necessary to ensure that your specific policy will allow for coverage in this circumstance.
3. Missing documentation
In order to process a claim, insurance companies need to verify all the important and necessary information surrounding your accident. Sometimes, certain documentation is required to complete this verification. These documents can include things such as invoices or bills, licences, evidence of your accident, or anything else of relevance. If you fail to submit all of your documents, your claim could end up being denied.
However, this can be easily resolved. You are always able to re-submit your claim with the proper documentation if you find yourself in this situation, provided the claim is submitted within the timeframe required by statutory conditions.
4. Your claim involves illegal activity
This one may seem quite obvious, but many people still try to submit claims that are somehow connected to criminal activity. If your vehicle is used for illegal activities within your knowledge, this is grounds for a claim to be denied. Examples:
- If you have received any convictions, criminal or not, within the past three years, this is something that your insurance broker must be aware of. Any conviction stays on your driving record for three years from the conviction date. Therefore, only convictions in the past three years are required to be disclosed.
- If you are convicted of using your vehicle while under the influence of alcohol or drugs, your claim may be denied. Driving while intoxicated or high is extremely illegal, as it puts every single person on the road at risk.
- If you are involved in any sort of accident and are caught driving with a suspended licence, your insurance company can deny your claim. In this circumstance, they can even cancel your policy altogether.
What to do if your insurance company refuses to pay your claim?
Let's say your car insurance company denies your claim. What exactly are you supposed to do now? There are a couple of steps you may want to take that could result in a reversal of their decision:
- Take a closer look at why your claims adjuster denied your insurance claim in the first place by reading over your claim denial or claim experience letter, which outlines the reasoning behind their decision.
- Gather evidence that you may not have documented before. Your insurance company needs as much information as possible so they can have a better idea about what happened.
- Take a look at your insurance coverage to ensure you have a full understanding of your policy limits, what's specifically excluded, and your deductible. Contact an insurance agent for any clarifications you may need.
- Write an appeal letter about the auto accident and give it to your insurance company for review.
How to file a claim with your auto insurance company
Filling an insurance claim can be daunting at first. But, if you follow these steps, you can speed along the process:
- Gather evidence of the accident, including photos, videos, police reports, and other important information.
- Contact your insurance company and speak with an agent.
- Answer questions about the accident and get assigned a claim number.
- Allow your adjuster to investigate the incident.
- Wait to hear from your insurer about whether you're covered and the compensation your adjuster is offering. Don't forget to negotiate if you feel you are not being fairly compensated.
Protect your vehicle with high-quality insurance coverage
Car insurance in Canada can be divided into two categories: mandatory and optional coverage. To ensure you have property coverage, here are the types of auto insurance you should consider:
Uninsured driver insurance
Mandatory uninsured motorist coverage protects policyholders in the event they are involved in a collision with another driver who does not have a valid or substantial auto insurance policy, ensuring that they are able to receive proper compensation for any damages or losses. Uninsured motorist insurance also protects you in the event you are involved in a hit-and-run incident.
Accident benefits coverage
Statutory accident benefits coverage is another mandatory policy in Canada. Accident benefits coverage ensures that you and any passengers you carry who are injured in an accident receive reimbursement for any medical expenses incurred and other costs, regardless of who is found at fault.
Direct compensation - property damage
Direct compensation - property damage is a mandatory insurance policy in only some provinces. Essentially, this policy coverage allows you to deal with your own insurer if you are involved in a car accident where the other driver is at fault. Ultimately, this is meant to guarantee that you get compensation quickly from your insurer without having to deal with a middleman.
Third-party liability insurance
Third-party liability is mandatory for all Canadians. It protects policyholders in the event they cause injuries or damage to property to a third party by paying for medical expenses, repairs, replacements, legal fees, and other expenses that may result from a lawsuit.
Collision car coverage
Collision car coverage is an optional insurance policy. It provides compensation to policyholders in the event their vehicle is damaged by an insured event for which they are found not at fault.
Comprehensive car coverage
Comprehensive car coverage is another optional insurance policy you may want to consider. It essentially covers you if your vehicle is damaged by a non-collision event such as vandalism, theft, a falling tree, or other perils mentioned in your policy.
Accident forgiveness
Accident forgiveness is a policy that can help you avoid an insurance premium increase following your first at-fault accident. This is a one-time policy and is meant to reward safe drivers who maintain a clean driving record.
Contact BrokerLink today
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Come visit us in person to work with an experienced broker from our team in person, or get in touch with one of our licensed insurance professionals over the phone.
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FAQs on why an insurance company may deny a claim
How many car insurance claims are there a year?
Can I cancel my car insurance claim?
Yes, you can cancel a car insurance claim. Just keep in mind that you may not be able to do so further along in your claims process. Further, if you are found at fault for the incident, you'll likely be denied the possibility of cancelling.
Is reporting a car accident mandatory?
Whether or not reporting a car accident is mandatory by law depends on the province and territory in which you reside. We recommend checking your local regulations online for further information about reporting a car accident. Additionally, remember that there are consequences for failing to report an accident, including fines, a driver's licence suspension, and more.
What should I do if I'm in a vehicle accident?
We understand that being in an accident can be overwhelming, which raises the question of what to do if you’re in a car accident. First and foremost, it's important to remain calm and seek medical assistance if you need it. You'll also need to document evidence for your insurer and exchange information with the other driver. Once this is dealt with, you'll need to report the accident to your insurer and begin the claims process.
Do accidents affect insurance rates?
The unfortunate truth of the matter is yes, an accident will impact your insurance premiums. But how long will an accident affect car insurance rates? It really depends on the severity of the accident in question. For example, a serious collision could remain on your driving record for up to six years.
Do I need a police report for my claim?
Whether or not a police report is required for an insurance claim depends on the province and territory you live in. For example, in Ontario, you only need to notify the police if damage exceeds $2000, if there are injuries, or if any other requirements need to be met. That said, having a police report regardless can assist you with your claims process as it provides an accurate description of the events that took place and outlines who is responsible for the collision among the drivers involved, which could work in your favour when your adjuster is reviewing your claim.
Should I call my insurance after a minor accident?
Calling insurance after a minor car accident is recommended, especially if you have proper insurance. Remember that not all damages or injuries can be seen right away, and your insurance company is there to help pay for repairs and medical expenses that may arise following the incident.
If you have any questions, contact one of our local branches.
