Why do we purchase car insurance? Well, part of the reason is that our local authorities require it. Still, the whole point of buying auto insurance coverage is to enjoy peace of mind.
Whether we get into a car accident, or a tree or its limb falls on our car, we’re assured that our car insurance company will help us sort things out.
So, why do some people get their car insurance claims denied when something terrible happens to their vehicle?
Can a Car Insurance Company Refuse Paying a Claim?
Yes, under certain conditions, the insurance company does indeed have the legal right to deny your insurance claim. Of course, they can’t just do it if they feel like it. They can only reject your request if there is some condition in the insurance policy that wasn’t honoured on your part.
Don’t worry, though. In the rest of this article, we’re going to explore several common reasons why auto insurance companies might reject an insurance claim. Then, we’ll go through a few tips to reduce the chances of that happening to you.
Why Would a Car Insurance Claim Be Denied?
No matter the type of auto insurance you’re buying, whether it’s the conventional type or a pay-as-you-drive auto insurance policy, there are four general reasons for an insurance claim refusal. They include non-disclosure, exclusion clauses, fraud, or cancellation of the policy.
1. Non-Disclosure
In simple terms, ‘non-disclosure’ is when you don’t tell the insurance company something important and relevant to your auto insurance policy.
That could include information about previous insurance claims, any road offences you may have committed, or if there was something wrong with your car at the time.
To prevent this problem, you must answer all of the insurance company’s questions honestly and openly. That will include any questions on the insurance forms and anything that the insurance agent may ask you during your discussions with them.
2. Exclusion Clauses
Just like any other form of insurance, auto insurance policies also come with exclusion causes. These are specific situations or conditions in which your insurance company will not cover any damages or losses.
One typical example of this is if you’re using your personal vehicle for business reasons. Suppose you decide to use your car to make money with a rideshare service, or if you’re using it to transport materials to your job site. Something like this could violate your insurance policy’s conditions, such that it frees your insurer from the obligation of paying any damages or losses you suffer during that time.
To prevent this problem, make sure that you’re fully aware of your auto insurance policy’s exclusion clauses. More importantly, stick to the rules at all times to continue enjoying the benefits of your car insurance coverage without any concerns.
3. Fraud
This reason is pretty straightforward: if the insurance company finds that you’re acting dishonestly in any way, they can (and will) reject your insurance claim.
To avoid any doubt, always be open and honest with your insurer when filing an insurance claim. You can also make your request stronger by collecting and providing as much evidence as possible, like taking pictures at the accident site or providing any dashcam footage to your insurance company when making a claim.
4. Cancellation of the Policy
There is a chance that your insurance claim gets rejected because the policy wasn’t even in effect. That’s why you must make the occasional check to see that your policy is running.
What could cause this? A common reason is that your payments to the insurance company didn't go through. That's typical for situations where you've selected auto-debit payments to an account that has inadequate funds to cover your insurance premiums.
Another reason could be that the company cancels the insurance policy because they find that the existing policy’s risk levels have become excessive.
In any case, the insurance company should notify you that the policy is no longer in effect. However, it’s always best to be proactive and occasionally check, either by calling them up or doing it through their online portals (if they have one).
What Do I Do If My Car Insurance Claim Is Denied?
Suppose your insurance claim gets rejected. That’s not necessarily the end of the story unless you choose to let it go and find another way of paying for the damage or losses you’ve suffered.
Insurance companies have dispute resolution departments to whom you can write and call to file an appeal.
If you believe that their refusal was unjustified, you could also escalate the issue to the General Insurance Division of the Australian Financial Complaints Authority or “AFCA”. They might be able to provide you with advice and assistance in the matter.
Lastly, if all else fails, you could take the issue to court.
How Do You Make Sure That Your Insurance Claims Will Not Be Rejected?
While an insurance claim refusal can seem scary, the truth is that you have nothing to worry out. All you have to do is make sure that you take the necessary steps to reduce the odds of being rejected. Here are a few of them:
1. Be Open and Honest
Whenever you interact with your insurance company, always be open and honest. That includes the information you provide on forms and any discussion you may have with your insurance agent.
2. Notify Insurers about Car Modifications
It’s essential to notify the insurance company if you make any modifications to your car. Always remember to make those notifications in written form so that you can keep a record of it.
3. Always Have Your Driver’s Licence
Never drive without a driver’s licence, or let an unlicensed driver use your car. Operating your vehicle without a valid licence can be the first and quickest way for an insurance company to reject your request.
4. Practice Safe Driving
Last but not least, practice safe driving habits. If you’re an unsafe driver putting yourself at unnecessary risks, such as driving drunk, the insurance company has grounds to deny your insurance claims.
Learn More about Car Insurance
To learn more about auto insurance and other topics relevant to car owners in Australia, check out the blog at Carpart.com.au. New articles are always updated on the blog to help you become a better-informed car owner and driver.
It goes without saying that you need to keep your car in tiptop shape. You should have it serviced regularly and any damaged parts replaced promptly. If you need auto parts, you can always look them up using our handy Parts Finder. It’s easy and free to use, and you’re guaranteed a quick link to CarpartAU-vetted auto parts sellers and wreckers! Get a quote now!
By Ray Hasbollah