Many drivers know that having good and sufficient auto insurance coverage provides an assurance that damages will be paid for in case of an accident. However, what many don't know is that there are circumstances where a car insurance carrier will not pay out a claim.
If you have been through a situation where your auto insurance company turned down your claim, this may sound familiar. Most people don't bother to read the fine print, we just don't have time and we don't know the lingo. Nevertheless, it useful to be aware of the basics, such as reasons your car insurance company may not payout for a claim.
This one is pretty obvious, but the amount of people that forget to pay their car insurance bill is staggering. Whether it's because they are on holidays, didn't get the mail, moved or simply forgot to pay. Most auto insurance companies may cancel the insurance policy if they didn't receive the amount due in time. Of course, they usually send out reminders and may attempt to call, but the bottom line is; if your insurance policy is cancelled, you are no longer covered and your insurance claim will not be paid by the car insurance carrier.
Forget about surveys or some sales rep trying to sell you additional options. Your car insurance provider may seek some additional information required for your policy. This could happen if you forgot to provide it initially or it becomes mandatory afterwards. This could also be a result of change in insurance regulations in your state, for example.
Some insurance companies may attempt to reach the customer by mail. Not replying or returning calls from your car insurance provider, especially after an extended amount of time, could prompt them to question the information they have on record; such as address, phone number...etc. If they don't hear from your for while, they may consider cancelling your policy, in which case your claim will not be paid out when needed.
It's not uncommon for people to provide false information to their insurance company in attempt to reduce their premium or get a cheap car insurance. Details such as your address, driving history, previous offences, credit history, car make, yearly mileage, insurance claims are all information that help car insurance companies access the risks associated with drivers and provide car insurance quotes accordingly.
Most insurance companies run checks from different sources to validate the information they receive from customers. Some of these checks are carried out when a claim is logged. If your insurance company determined that you provided false information either initially or when logging a claim, they may cancel your policy and refuse to honour your claims.
We all like to pimp our cars to make them look just the way we want. That may not sit well with some car insurance companies. Car modifications may void your manufacture warranty if the car is new and some insurers consider certain modifications, especially on core functions of the car, to introduce serious issues and may even contribute to an accident. Not to say that what comes out of the car factories isn't perfect, we all know how a disaster was the accelerator pedal in some Toyota models and the recall of 2.14m Nissan cars with stalling fault.
Bottom line is, failing to notify your insurance carrier about car modifications may result in non-payment of a claim if logged. Insurance providers usually find this information after sending out an expert to access car and property damages or via other sources.
If you are caught with traffic or speeding offence bad enough to have your license suspended or cancelled, your insurance policy will follow. Insurance companies mandate that you notify them with any changes of your circumstances, which included road offences and the validity of your driving license. If you drive while banned or with suspended license, your insurance policy is likely to be void and the insurance company will refuse to compensate any claims you make.
Not all car accidents are purely a result of a misfortune. As with everything, there has been cases where people involved in insurance scams faking an accident to get personal injury or property damage compensation from insurers. Not only this is illegal, but insurance companies take strong action against those looking to abuse their insurance policies and will cancel policies, refuse claims and event take legal actions against offenders. It doesn't stop there. Insurance companies are known to share information among them and with authorities to help tackle insurance fraud and insure that offenders won't get another chance with a different car insurance company.
As with life insurance policies, most auto insurance companies include a clause to refuse payment of claims as a result of "intentional damage", as suicide is an act where a person wilfully decides to end to their life. In most cases, this is difficult to prove, unless the person left some clear evidence that after investigation the police and insurance investigator concluded the accident to be caused by a suicide.
There are other cases where car insurance companies may refuse to payout for a claim and it's usually stated in the insurance policy. If you are not sure, please contact insurance provider and ask. If the small print is complicated, it may be easier to visit your nearest insurance provider's office if available. More information is also available via the Department of Insurance in your state.
Being denied claim when you need your car insurance coverage most is not a situation you want to be in, especially if you are found at fault of causing an accident. The other party's insurance could sue you, depending on the extent of damages and it could turn to a financial disaster with whatever you own at stake.