15 Shady Tactics Car Insurance Companies Use to Reject Your Claim

When you sign up for insurance, you might encounter friendly, welcoming staff eager to assist you. However, when it’s time to file a claim, that warmth can quickly turn cold. 

While not all insurance companies operate this way, it’s a common experience. Be aware of the tactics some insurers use to deny claims, and be prepared to seek legal advice promptly if needed to avoid falling victim to their strategies. Here are some things to watch out for. 

Lowballing

It is a very common tactic used by insurance companies. They offer an amount so small compared to the actual damage that it becomes useless for the policyholder to spend his time and energy getting the claim. The good thing is that it’s illegal. One can always hire a lawyer to fight such a tactic, but insurance companies that do so are expert at making you believe their words.

Asking for Unnecessary Documentation

Sometimes, the companies might go for a bitter-sweet denial. They ask you to fetch random documents, and once you are back with the document, they suddenly recall that they need more of them. Even if you somehow fulfill all their “much-needed” document needs, they try to find some loophole in documents that will deprive you of your rightful claimed money. Trust your instinct if you ever sense your insurer is asking for unnecessary documents.

Underestimating Damages

What can you do if your insurance company labels your totaled car as “repairable”? They may try to downplay the extent of the damage to avoid paying out a full claim. If you suspect this is happening, trust your instincts and consider seeking legal assistance. The law can help ensure you’re not shortchanged.

Delaying Tactics

A common strategy some insurance companies use is delaying payment. They might drag out a simple claim for six months or longer, knowing that the financial strain can push people to move on and abandon their claim. This tactic often works, as many give up and resume their lives without the payout they deserve. However, filing a bad faith lawsuit can force the insurer to act and resolve the matter promptly. 

Using Biased Experts

When insurance companies conduct investigations, they sometimes bring in biased experts if they want to deny a claim. These so-called “experts” are often swayed by the company, leading to findings that favor the insurer over you. If you suspect that the investigation is unfair or biased, it’s crucial to request an independent assessment or seek legal advice to protect your rights.

Ignoring Evidence

While it’s a clear violation of the law, some insurance companies tactfully ignore or dismiss crucial evidence to deny your claim. They might disregard eyewitness testimony or, in more extreme cases, even withhold evidence so you can’t use it in a lawsuit. It’s important to remember that evidence isn’t just for the insurance company’s benefit—it can work in your favor too. Always keep a copy of any evidence and consult a lawyer if you suspect the insurer is playing unfairly.

Twisting Policy Language

Here’s how it works: your policy might mention coverage for “wear and tear,” but without specific details. When it’s time to file a claim, the agent could argue that the coverage only applies to sudden wear and tear, not gradual damage. Some insurance companies deliberately leave these vague terms in the contract, planning to exploit them later. In other cases, they might use complex jargon to obscure the true reason for denying your claim. Always review your policy carefully and seek clarification on any unclear terms to avoid these traps.

Blaming the Policyholder

This tactic is particularly frustrating. After experiencing a difficult situation, the last thing you want is to be blamed for it. Yet, some insurance companies may try to shift the blame onto you, claiming that the incident was your fault due to poor vehicle maintenance or negligence. They might even suggest that you caused the damage intentionally. When faced with such accusations, remember that your lawyer is your best ally, ready to challenge these unfounded claims and protect your rights.

Not Investigating the Incident

The insurance company might not even investigate the matter at all – not even enough to support their denial! It denies the claims without investigating the incident, and if they need to, they’ll misuse technicalities to turn down your request.

Telling that You are Late to Report

The insurer might claim that you reported the incident too late, even if you filed it within the required timeframe. They may cite “changed” policies as the reason for denial. However, if you challenge them on this, they may switch to other tactics to reject your claim. It’s essential to know your rights and not be easily discouraged by these shifting justifications.

Accusing You of Lying When You Applied

The world is constantly changing, and the parking spot you listed in your application might differ from the one you used during the incident. But that’s all the insurer needs—a small discrepancy. They may accuse you of lying on your application, use it as grounds to deny your claim, and even threaten to cancel your policy if you challenge them. This tactic preys on fear and confusion, so it’s crucial to stand your ground and seek legal advice if necessary.

Forcing You to Settle for their Mechanic

Just like you have a family doctor who is aware of your medical history and knows everything about it without repeating it on every visit, a specific mechanic knows all the ins and outs of your vehicle. However, some insurance companies might push you to use their affiliated mechanics for repairs, even if it wasn’t stipulated in your contract. This pressure can be frustrating, and if you value your vehicle’s well-being, you might feel compelled to withdraw the claim rather than compromise on quality.

Relying on the “On-the-Spot” Police Report

The police report written during the incident might fail to register any issues that arise later. Of course, the insurance company will then reject the claim of damages that surfaced later and take the police report as final, leaving you out of pocket. 

Declaring your Claim Closed

Once an insurance claim is marked as closed, it generally cannot be reopened. Some insurers may exploit less experienced policyholders by declaring a claim closed prematurely, even for minor issues. It’s important to know that a claim can only be officially closed after a settlement, a judgment, or if the statute of limitations has expired. Before agreeing to any settlement or closing the claim, have your lawyer review all documents to ensure your interests are fully protected.

Informing that the Policy has Expired

The day you apply for the claim might be when they announce that your policy has expired. They might blame any late premium payment for the cancellation or lapse. Sometimes, that’s the day you get to know that the information you provided was not “enough,” and thus, the company had to suspend your policy.

Protect Yourself!

Reports have surfaced about companies firing agents who fail to deny claims, highlighting a troubling trend in the industry. Many now see these practices as a significant scam, especially if they are not careful. Remember, a policyholder without a lawyer is the insurer’s easiest target, so always have one onboard to stay safe!

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