It’s why we carry car insurance in the first place – for the unexpected day when we have to file a claim. A car accident is a horrible experience, but a policyholder can take solace in the fact the damages will be paid for. Or will they? Unfortunately, they are situations where the car insurance company will deny your claim. Below are six instances where this could happen and what you can do to prevent it.
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Not Knowing What Is Covered
Do you know what is covered under your car insurance policy and what isn’t? Unfortunately, many policyholders aren’t aware of what is included in the scope of their car insurance policy. For example, let’s say a policyholder’s vehicle is damaged in a nasty hailstorm. The policyholder files a claim – the thought being that he or she is obviously not a fault for the damages here, so surely this is covered. What the policyholder fails to realize that he or she only has liability coverage, which will not cover storm damage. As a result, the claim is denied.
Every policyholder needs to understand what is and what isn’t covered by their auto insurance policy. Only by understanding the scope of coverage can a person accurately determine if they have enough car insurance. Do you want your car to be insured for storm damage, vandalism and theft? Liability coverage will not cover claims such as these; you will need comprehensive and collision insurance.
Cost of Damage Exceeds Limits Of Coverage
Every insurance policy has a monetary limit. If the claim amount exceeds this limit, either it will be denied or the insurance company will pay out until the limit is reached. This demonstrates the danger of carrying only the state required minimum for auto insurance. If you get into a wreck and the damages are north of $300,000, but only have a $30,000 limit, your claim for $300,000 will be denied. The insurance company will pay only the $30,000 covered in your policy; you will be on the hook for the remainder.
It is extremely unwise to skimp on liability coverage. Don’t think a car accident could have damages in $300,000 range? You don’t have to hit a Ferrari to cause a very expensive accident. If you factor in medical bills, lost wages, emotional costs, etc. a car accident can become extraordinarily costly. It is important to be aware what your policy limits are and to raise them to an adequate level, if need be.
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Coverage Lapse Due To Non-Payment
Forget to pay your car insurance bill? Well, the consequences can be quite severe. You will receive more than just a late fee; your coverage could lapse and you would be without car insurance. If you drive with a lapsed policy and get into an accident, the car insurance company will reject your claim. In this scenario, you would have to pay for the damages out of your own pocket, which could potentially cripple you financially. Stay on top of your bills and make sure to pay your premium before the due date.
Failure To Notify Insurance Company Of Upgrades
Did you invest some money into your car with a slew of new upgrades? Perhaps you gave yourself a kicking new stereo system or outfitted the exterior with shiny new rims. Problem is that unless you inform your car insurance company of these upgrades, they will not be covered. If something were to happen to your vehicle and you file a claim to cover them, it will be denied since the insurance company was never made aware of their existence.
At the same time, there are some modifications that can actually void your insurance policy. Be sure to contact your auto insurer and make sure that changes you have made to your vehicle aren’t actually voiding your insurance contract.
Failure To Update Insurance Policy
Have a new driver in the house? If you want them covered when they motor around in the family vehicle, you must contact your auto insurance company and add him or her to your policy. Some parents forget to add their newly licensed teenager to their insurance policy and when the teenager gets into a wreck, they are shocked to discover the teenager is not covered. The same holds true for when you buy a new vehicle. You have to get a hold of the auto insurance company and inform them you need to add a vehicle to the policy. Otherwise you won’t be covered and are in fact breaking the law by driving around.
Driving While Intoxicated
Car insurance companies will often refuse claims made by drivers who became involved in a car accident while intoxicated. At best, the insurance company will only cover damages to the victim, leaving the policyholder on their own. There is also an extreme likelihood that the policyholder will be dropped. In short, driving while drunk is a very serious violation. Do not do it. You will be breaking the law, putting yourself and other motorists in jeopardy and if you were to get into an accident, you could be financially ruined.
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