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Insurance companies can only deny coverage in very limited and specific circumstances. When an insurance company offers coverage to a client, the policy is usually for six months and covers any accidents or injuries that occur to the driver. The company will cover an accident that is the fault of the driver, but they may drop them at the next renewal. The company must still pay for all damages according the policy for an accident that occurred during the coverage period.
There are some exceptions to the rule. A company may refuse to pay for a claim that does not fall under the coverage of the policy. Exclusions and exceptions are common to most policies. These include non-payments of premiums on time, or illegal acts.
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Violation of the Law
You may not be able to claim on your insurance if you violate the law when you drive your car. If, for example, an insured person permits his/her car to be used to commit a robbery – whether the insured driver is actually driving the vehicle or not – the insurance company can claim that the policy does not cover illegal acts. Many companies also have DUI exclusions. This means that they state in writing that any damages resulting from an accident where their insured driver’s blood alcohol level, or BAC was higher than the legal limit are not covered.
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Use the vehicle with Carelessness and Recklessness
Insurance companies do not only exclude illegal acts. If it can be proved that the insured driver deliberately drove the vehicle in an unsafe or careless manner, insurance coverage may not be provided. If, for example, someone is allowed to drive a car without a valid driver’s licence, an auto insurance company can deny a claim.
Non-Payment of Premiums
Insurance companies often face the issue of non-payment when they are asked to pay for claims. A person’s coverage could be affected if they are behind in their premium payments. Most states have a grace period during which the coverage is still mandatory even if a person is late with their premium payments. However, if the person has not paid within the grace period, the coverage can be denied.
Claim for Damages Outside of Your Policy Coverage
A claim may be denied to you based on your coverage. If you decide to drop comprehensive coverage, any claims you make will be denied by the company. This can include theft, weather-related incidents, or accidents that are not caused by a collision. In the same way, collision coverage pays for damage to your vehicle if you cause an accident. If you cancel your collision insurance, your company won’t pay for repairs to your car if you are at fault.
There are very few cases where insurance companies may legally deny an application. Insurance companies are required to pay claims if they offer a policy to you and accept your premium. This includes paying other parties in case you were at fault for the accident.
Insurance companies can “fight” claims from other parties if they feel that the other party is at fault. In some states liability insurance is assessed on a percentage-based basis. If both parties are at fault, the court will determine how much blame each party bears.