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What if My Claim is Denied?

Getting your insurance claim denied is not a lot of fun. The good news is quite often, a denial can be turned around if any of the details or facts have been overlooked. The first thing you need to understand is there are a number of reasons that an insurance claim can be denied. For instance…

  • You might not have the type of coverage that was needed for your specific case. For instance, if you don’t have collision insurance, when you file a claim for damage to your car, it typically will be denied.
  • It’s possible you filed the wrong type of claim and it didn’t apply to either you or the other driver.
  • Your insurance coverage might have lapsed or you’re late on a payment.
  • The amount of damage exceeds limits on your policy.
  • You were in an accident before your policy was active.

There are a number of legitimate reason’s your claim might have been denied, so the first order of business is to find out specifically why it was denied. If after that, you feel like your coverage has been wrongfully denied, everyone has rights within the parameters of the policy and according to state laws. And you need to know legally, your insurance company is required to work in a manner which is considered “in good faith”.

If you think it’s possible you were wrongfully denied, write your insurance company and tell them exactly where they might have made a mistake or have wrong information, or not enough information. If that doesn’t work, you can take your beef to the State Insurance Commissioners office and file an appeal. And as a last line of defense, you can take legal action by hiring an attorney and suing your insurance company for breach of contract or a number of other violations. Whatever you do, keep a level head about it, find out ALL the details, and be persistent. You have rights when it comes to any claim denial.

What is Gap Insurance?

So, what exactly is GAP insurance? In a nutshell, GAP insurance was created to provide auto insurance protection for “new” cars that are being financed. Application example…If a new car were stolen or totaled in an accident, Gap insurance will pay the difference between the cash value of the car and the current outstanding balance on your auto loan or lease. You see, when a new car is driven off the lot, it depreciates quite a bit. So, if your car were stolen a week later or totaled in an accident, your insurance company would pay what the cash value is on the car, not what you paid for it the previous week. Because of depreciation, this cash value would be quite a bit lower than what you paid and you would be stuck paying off the difference. That’s where Gap car insurance comes in.

Typically, Gap insurance covers accidents and thefts but you should check with your agent and make sure, because as we know, all policies are not created equally. Find out if it covers fire, tornado, vandalism or any other concerns you may have.

Gap insurance is not required when you buy a policy for your car. When you purchase your car, the dealership may ask you if you want to purchase Gap insurance from them. Normally you don’t want to do this because the premium price offered by dealerships is typically very high. Ask your agent if they offer it and how much it costs. Some insurance companies build in Gap insurance into your policy automatically so you may already have it.

Car owners generally assume that if their car is totaled or stolen, their policy will cover the value of the car, which many assume is what they owe on the vehicle were they to finance it. What you owe on the car and what the actual value of the car is almost never the same.

If you want Gap insurance, find out if there are any exclusions to the policy such as maximum limit or loss. The policy might have a maximum coverage dollar-wise or a ceiling on the loan-to-car-value ratio that they won’t go beyond. There also might be exclusions having to do with how your auto loan or lease is structured, loan amount or term of loan. Check all details with your car insurance agent before you buy. It’s also a good idea to estimate how long you’ll need the policy based on your car’s value moving on into the future. Your car’s greatest rate of depreciation is when you drive it off the lot and slows down considerably after that.