Monday, January 28, 2008

Denial Car Insurance Claim & Dispute with Insurance Company

1.Denial Car Insurance Claim

There are many reasons a car accident claim can be denied, valid or not.

Some common reasons for denial are:

• No car insurance coverage was purchased for the claim presented. For example, if you drive an older vehicle, you may carry only liability insurance and have no collision coverage because it is expensive. A claim under your policy for damage to your own vehicle will rightfully be denied.

• You made an Uninsured Motorist Claim under your policy and it turns out the other party to the accident was insured.

• You do not qualify as a named insured under the policy. For example, you are a teenager and you are specifically excluded under your parents’ policy because your parents do not expect you to drive their vehicle.

• Your coverage has lapsed because you failed to pay your premium before the end of the grace period.

• The amount of damage claimed exceeds your policy limits and the insurance company will not cover the excess.

• You bought a new car and failed to notify the insurance company to add it to the policy within the specified time given in the policy.

If, after reading the insurance company’s reasons and reviewing your policy, you still believe coverage has been wrongfully denied, there are some steps you may take to try to remedy the situation. You have certain rights under your policy and under state law. Your insurance company has a duty to fairly and promptly settle your car accident insurance claim in good faith.

Steps you can take if coverage has been wrongfully denied:

• Write back to the insurance company to tell them where their mistake is and provide them with documentation to support your response.

• Appeal the company’s decision to the State Insurance Commissioner.

• Hire an insurance bad faith attorney to discuss the error with the insurance company.

• Sue the insurance company for bad faith, breach of contract, and/or violations of your state’s insurance code.

If the insurance company realizes its mistake, or you are correct in that the adjuster made an error, they will reopen your claim and move forward with their investigation. Where you don’t understand their reason for denial, ask for clarification. It would be wise to consult an attorney to make sure they are not erroneously denying your claim.

CAUTION: Your insurance company is required to act in good faith when handling your car accident claim. If the insurance company unnecessarily denies your claim or fails to promptly settle it, you can sue them for bad faith, breach of contract, and violations of your state’s insurance code. It is crucial that you seek out an auto accident attorney who is experienced in insurance coverage litigation if you believe your insurance company is not handling your claim fairly.

Note that if your car accident claim is with the insurance company for the other driver involved in the car accident, a failure to settle promptly or fairly is not a denial of the claim. You should contact an attorney to either negotiate a settlement for you or to file suit against the responsible driver. Under some circumstances and in some states, you may also file a complaint with the State’s Department of Insurance for Third Party Bad Faith.

2.Dispute with Insurance Company

Most insurance policies contain an “appraisal clause” which means that disputes between insurers and policyholders must be arbitrated (where a neutral party decides the outcome of the dispute) and not litigated (decided in a court of law). Basically, each party hires an appraiser to look at the claim and proposed settlement figures. If the appraisers can't agree on a fair settlement of your claim, they will submit their differences to a neutral third appraiser (commonly known as an umpire), and a decision by any two of the three is usually binding upon the parties.

Costs. Although arbitration is less formal and usually less costly than litigation, it is not free. Each side pays the cost of its appraiser and splits the cost of the third appraiser, if there is one. Obviously, if the appraiser fees are more than what you were looking for from a settlement offer, the process isn’t worth your time. Therefore, consumers should analyze the difference between the settlement amount they are seeking and the amount offered to see if going through the process is financially sensible.

Other important points.
• Either party can normally invoke the appraisal clause when a settlement amount cannot be agreed upon.
• The arbitration process can take anywhere from a couple weeks to a couple months and can only be used in matters where damages are the only issue.
• If your insurer does not honor the arbitration decision, it is acting in bad faith and you may then take them to a court of law. Hiring an attorney is highly advisable in this situation.
• Appraisal clauses are between insurers and their policyholders only.