How to Avoid the Most Common Auto Insurance Claim Denial
Tips from an Insurance Claim Lawyer’s perspective:
Auto insurance companies will do whatever they can to deny your insurance claim. Insurance companies are a business and they’re in the business of making money. The more insurance claims they can “legally” deny the more money they will make. Although there’s a number of reasons why an insurance company may deny your insurance claim (mostly listed under the exclusions portion of your policy), the most prevalent method for denying a claim comes in the form of what insurance carriers call “material misrepresentations.”
A material misrepresentation simply means that the insurance company is alleging that you have either lied to them during the insurance application process on the date you purchased the policy (e.g. your age, the number of people living in your household, etc.) or you have lied about something related to the insurance claim (e.g. your girlfriend smashed your car up but you later told your insurance company that a tree branch fell on it instead).
The most common “material misrepresentation” denial involves a policy holder’s failure to list the number of individuals over the age of 15 that live in the household. This usually comes in two forms: (1) during the application process the customer fails to inform the insurance company of all the people living in the house; and/or (2) after the customer purchases car insurance, somebody moves into the house or someone living in the house turns 16 and the customer fails to inform the insurance company of this change.
From the insurance company’s perspective, their justification for denying your insurance claim is “had they known” how many people really lived in your house when you applied for the policy, your rate would have been higher because you were a greater insurable risk for them. For example, if you live by yourself and have one car listed under your policy, from the insurer’s point of view, the risk of other people driving your car and getting into an accident is relatively low and they will offer you a lower premium and monthly payment. However, if you live with 10 people, all of which are old enough to drive, the risk of any of those people using your car and possibly getting into an accident has dramatically increased and the insurance company will want you to pay higher premiums in order to insure the greater risk. The issue comes into play when a customer purchases an auto policy and tells the insurance company that only one person lives in the house and later gets into an accident and the insurance company somehow finds out numerous other people have been living there for years. The insurance company will then deny the claim and refuse to pay out any money because the customer had made a material misrepresentation to the insurer.
However, the reality is that most instances of material misrepresentation are not black and white, bur rather, quite intricate and full of opportunities for a savvy insurance claim lawyer to attack in order to help you get paid on your denied insurance claim. For instance, many people buy their insurance policies through insurance agents or brokers or used car salesmen who fail to inform the customer about any of the things mentioned above in order to close on a quick sale. From a car salesmen’s perspective who helps the customer purchase an insurance policy on site at the dealership, the car salesmen (who might actually be on the phone the entire time with an insurance agent while never letting the customer speak) doesn’t care what kind of insurance the customer gets so long as it’s enough to let him drive off the lot and close on the sale—once the purchase is complete, he could care less whether the customer’s insurance company covers a future loss or not. The same goes for many insurance agents and brokers that get customers on the phone and speed through the application process in order to rapidly close on a sale resulting in a customer who has no idea what he’s just purchased.
For many consumers, the price of insurance is factored into their decision to ultimately buy a car. Because car salesmen and insurance agents know this, they try to sell customers the cheapest insurance policies they can get and purposely fail to inform the customer that all people living in the household need to be mentioned in order to keep the insurance rates low and help on closing the sale of the car. Other examples include customers who don’t speak English and have no clue of what they’re purchasing or what questions are being asked of them during the insurance application process while a broker hurries them along and gets their credit card information. There's also cases that include fluctuating household sizes where family members come and go or spouses get separated and its uncertain whether the household size has actually increased or not resulting in a questionable denial.
As far as unsolicited advice goes, if any of you plan on purchasing car insurance (or any insurance for that matter) make sure to pay close attention during the application process and inform the insurance agent/broker/company of all the people living in your household. Follow up by asking them if they need to know anything else in order to avoid any future problems. You will also want to read through your policy and find out what the procedure is to update your insurance company in the event someone moves in or out of the house or somebody becomes 16 years old. If anybody reading this knows for a fact that their insurance policy already misrepresents the number of people living in the household, call your insurer up and explain the mistake. Having to pay a few extra dollars a month far outweighs the headache that will result from an unpaid claim. I had a client come in the other day who’s car was declared a total loss valued at over $17,000 and the insurance company refused to pay a dime because the policy holder failed to mention that an additional person lived in the household. Although from a legal perspective there’s still something an insurance lawyer may be able to do to help get your claim paid, it’s not worth your time and frustration if you can remedy this before it starts.
That being said, there are many instances where an insurance company will still deny your claim for a multitude of reasons, including but not limited to material misrepresentations. In any case, call me or another insurance claim lawyer to help you out. Just because they deny a claim doesn’t mean that nothing can be done. Insurance companies know they can get away with denying claims because most people will never seek out legal assistance. Remember, in Florida, hiring an insurance lawyer to pursue an insurance claim denial should not cost you any money because the insurance company will be responsible for the attorney’s fees.
If you enjoyed this article and/or have an insurance law related question of any kind (homeowner’s, auto, life, etc.,), never hesitate to give me a call at (305) 200-8748 or email me at info@ciezalaw.com. The Law Office of Francisco Cieza, P.A., is dedicated to helping you with your insurance law related issues and getting you the money you deserve for your claims.
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