What If the Claims Adjuster Denies Coverage?

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If you have a personal injury case and you end up filing a claim with an insurance company—your own or the other party’s—a claims adjuster might contend that the insurance policy involved does not cover your accident. The reasons given for this kind of response might be:

  • the policy lapsed
  • the nature or location of the accident was’t covered under the terms of the policy (particularly if it’s a homeowner’s policy)
  • the person who caused the accident is not covered under the policy, and
  • you do not qualify to make a third-party claim under your state’s no-fault car insurance law.

When an insurance adjuster contends that there is no coverage for your accident, that does not end personal injury settlement talks. Instead, the coverage question simply becomes one more element in the injury settlement negotiation process.

Responding to a Coverage Denial

First, ask the adjuster to give you a written explanation of the insurance company’s reasons for claiming there is no coverage, including references to the specific policy provisions that limit coverage. This will reveal whether the adjuster is just bluffing, and will give you a chance to respond to the reasons more specifically. (Get more tips on first discussions with an insurance adjuster after an accident.)

If the adjuster does not agree to give you a written explanation, write a letter to the adjuster confirming your conversation, the denial of coverage, and the adjuster’s refusal to explain in writing. This letter may pressure the adjuster to give you the information, because a claims supervisor will not like having such a letter in the insurance company’s file. If you eventually go to the insurance commission or file a lawsuit to pursue your claim, the presence of this kind of letter in the claim file would show the insurance company’s lack of cooperation (and could suggest improper negotiation tactics or even “bad faith”).

If the other side’s insurer is denying coverage, ask the claims adjuster to provide you with a copy of the insured’s policy—or at least the portions on which the adjuster relies in denying coverage—so that you can read it for yourself. If the adjuster refuses, write a letter to the adjuster confirming the refusal so that it becomes a part of your claim file. Then, if the adjuster still refuses to negotiate with you about settlement, you will have to use other pressures to get negotiations moving.

In many cases, an adjuster will initially contend that there is no coverage. As soon as you indicate that you will not abandon your claim, however, the adjuster will begin to negotiate a settlement anyway. If, after that, you cannot reach a satisfactory settlement because of the coverage question (or any other problem) you will have to move into other settlement negotiating strategies.

If the adjuster seems to you to be correct that there is no coverage at all and refuses to negotiate for a settlement, you may be able to turn to insurance that covers someone else responsible for the accident. For example, suppose you file a slip and fall claim after you tripped on a cracked sidewalk, and the city claims there is no coverage because sidewalk maintenance is the legal responsibility of each property owner. You could then file a claim against the company that insures the owner of the property fronting the sidewalk.

Don’t Be Swayed by a “Lawyer’s Letter”

In claiming that there is no insurance coverage for your accident, an adjuster may tell you that “the lawyers” have said there is no coverage. The adjuster may even send you a copy of a letter from a company lawyer echoing that “fact”. Do not be impressed. A company lawyer’s opinion that there may not be coverage for your accident is no more binding than anyone else’s opinion. Whether or not there is coverage depends on the terms of the policy, and a policy can often be read in several different ways, depending on the facts. If the matter goes to court, ambiguities in a policy are often resolved in favor of coverage. Bottom line: The lawyer’s opinion doesn’t resolve the matter.

More Information on Personal Injury Claim Negotiation

You’ll find a lot more details on negotiating an injury claim—plus strategies for dealing with an insurance company that is refusing your claim—in How to Win Your Personal Injury Claim, by Joseph L. Matthews (Nolo).

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