Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Insurance companies must pay for your losses when your coverage is active and you comply contract terms
  • If you fail to make an on-time payment and your policy cancels, the insurer can and will deny your claim
  • One popular reason that car insurance claims are denied is when you don’t list a driver who lives in the household
  • Filing a fraudulent or exaggerated claim is cause for a rejected claim if the insurance company finds out
  • When you don’t carry full coverage and you file a claim for the coverage you don’t have, the insurer won’t pay

You buy car insurance with the intentions of staying claims-free as you drive. The longer you go without having a claim, the lower your rates will be.

Unfortunately, if you have a loss and you can’t afford to pay for all of the damages out of pocket, you’ll have no choice but to turn to your insurance company and file a claim.

Just because you file a claim doesn’t mean that the insurer has to pay it. Insurance companies have rights that are set forth in your contract.

The Consumer Bill of Rights protects you from unfair practices and the Personal Auto Policy contract protects the insurer from contractual obligations when specific terms have been violated.

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Here are some common reasons auto claims are denied:

Understanding the Insuring Agreement


Insurance policies are legal contracts that are made between the named insured and the insurance company. You should always read the policy so that you’re aware of the conditions that must be met for your coverage on your declarations page to apply when you have a loss.

Your insurance company’s responsibilities after a loss occurs are laid out in detail throughout the entire Personal Auto Policy. The insuring agreement is typically the first part of the contract that summarizes the promises what the insurer will do when a covered loss occurs.

In the auto insurance industry, the insuring agreement will either state that all perils are covered except those that are excluded or that only named perils are covered.

The insurer promises that your covered claims will be paid but only when certain conditions have been met.

The insurer has a responsibility and the policyholder does as well. Your first obligation is to be honest when you’re applying for coverage. After the policy is underwritten and your coverage takes effect, your main responsibility is to make payments.

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Can your claim be denied if you don’t make a premium payment on time?

Your insurance company’s responsibility is to pay for damages covered under your policy and to defend you against claims as long as you’re making your premiums payments.

Since you pay for your coverage up front, failing to make a payment will lead to cancellation for non-payment.

One of the most common reasons that first-party car insurance claims and third-party claims are denied is because the policyholder didn’t make their payments.

If you’re guilty of letting your policy lapse for non-payment, the insurance company won’t pay any claims you present during the lapse. If there’s a grace period and the coverage hasn’t yet terminated, you’ll have coverage for a claim that occurs before the grace period is up.

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What happens if the driver who has an accident isn’t listed on your insurance?

Your claim won’t automatically be denied if the driver who had an accident wasn’t on the policy. Under your policy, there are terms that protect you and extend coverage to people who borrow your car.

Unfortunately, that doesn’t mean that all of your friends and family members can enjoy coverage without paying extra premiums.

To avoid a claims denial, the unlisted driver must only drive the car occasionally. They can’t live in the household, have a financial interest in the car, or regularly operate the car.

If they do live in your home and they drive your car without their own coverage, they need to be rated on your insurance for coverage or the claim can be denied.

One way to ensure a claim will be denied is to let a driver who’s excluded on your policy drive your car. When you fill out a driver exclusion form and name a driver, you’re saying that you understand that the driver can’t drive the vehicle and the insurer won’t rate for the driver.

If you take that risk, you’ll have to pay for claims on your own.

Is driving your car for business cause for a denied claim?


Your personal car is supposed to be used to get to and from work, but it can’t always be used to conduct business.

Most personal policies will coverage you if you’re going to and from different business sites, but there are several business exclusions written into your policy.

Here are some types of use that can lead to a denial if you don’t have business insurance:

  • If you make a work delivery in your car
  • If you permanently install commercial equipment in your car to be used for work
  • If you have employees driving your personal vehicle
  • If you transport clients in your car as a taxi driver

If you file a claim for coverage you don’t have, your claim will be rejected. The insurer will still take down the details, but they are not obligated to pay if you didn’t pay for the coverage.

This happens most often when you don’t have physical damage coverage and you need to file a comprehensive or a collision claim.

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Can the insurer deny a claim if you’re guilty of criminal activity?


Making poor choices can lead to a claims denial. In many states, if you have a first-party claim and the police report shows that you were driving under the influence, the carrier has the right to deny your claim because you were violating a law.

The third-party claims made will still be covered.

Your claims can be denied for several reasons. Missing a bill or taking a drink and crashing are just some examples or reasons why you’ll have to pay your own bills. If you don’t have insurance, now is the time to get coverage.

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