You’ve received a coverage denial letter in the mail after an auto insurance claim; so why has the auto insurance company done this and how can you make sure it doesn’t happen to you when you come to claim on your car insurance?

Firstly, your car insurance company will issue a letter of denial if they complete their claim investigation and determine there is no basis for paying the claim. The most common reasons for issuing a denial of claim typically include; the claim is covered by a policy exclusion; non-payment of premiums has lapsed the policy coverage; failure to disclose material information when applying for insurance coverage; and equally serious, a fraudulent claim.

By far, the most common basis for denial is because the claim is covered by an exclusion clause in the policy. You can help yourself by making sure you are aware of what your policy excludes before you take the coverage out. This is where comparing auto insurance policies is a handy skill to have and by no means is it an easy one to acquire. Nevertheless, once you have the policy in force you need to be able to find your way around the policy conditions and exclusions so you minimize the risk that an incident will not be covered.

More serious reasons for denial of coverage are misrepresentation and fraud. Misrepresentation of facts on your insurance application will invalidate the policy and you will not be covered; at best all you’ll be entitled to is a refund of your premiums and at worst, liability for the damage caused which may run into tens of thousands or more.

Fraud is very serious, as it is frequently a criminal offence as well as having insurance coverage implications. Claiming for an in-car DVD system when you simply had a basic radio, adding items not in the car when it was stolen or inflating the value of your vehicle above what it was really worth are good examples of insurance fraud. In fact, most insurance fraud is easily spotted but the ramifications are dire;

When you discuss the claim with the insurance investigator, never say anything you are not sure of. If you are asked to provide an immediate answer to an investigator’s questions simply advise them that you cannot be completely accurate and you will answer when you can be as accurate as is possible. Never sign anything you do not understand; this is good advice for several reasons not least that an insurance company will be looking to minimize the claim’s dollar amount (as it directly reduces their profits) and limit any potential liability from the accident or claim, for instance, you have an accident however you only develop health issues related to the wreck several months later. If you signed a waiver, you have no basis to go back to re-open the claim and you will not be covered. Always ask for questions and queries to be dealt with in writing so you create a record of what has been discussed and any mutual understanding just in case you have to go to court; remember you will have the burden of proof in proving your claim but the insurance company will have the burden of proof to show they have denied your claim properly.

Never admit liability or that anything that occurred was your fault. In most cases, this nullifies your coverage!