What Happens When My Insurance Company Refuses to Pay?

By Beth M. Zelman
Staff Writer

BOSTON - Like any good twenty-something I recently had my first encounter with a car insurance company when I locked eyes with a deer on I-89. My first reaction was oh, how beautiful. My second was a little less cheerful. It was like a deer explosion. The once majestic creature flew a good 12 feet in the air before it landed on the side of the road, sans one leg. Miraculously my car was still drivable and the deer was the only casualty. When I got home and called the car insurance company I was prepared for the worst, but the first words out of the handler’s mouth, after being assured I was okay were, “did you get to keep it?” $1,800 later I got to thinking. What if my insurance company hadn’t been so understanding and agreeable? What if they had refused to pay? Do I have any rights? And, what are they?

When an insurer denies a claim it is usually because the company has determined that the claim is not a type that is “covered” by the terms of the policy, the person that suffered a loss is not an “insured” or that the insured engaged in some sort of misconduct that voided the coverage. Resolution of these disputes is complicated and can depend on the wording of the insurance policy, the unique facts of the incident and the applicable state law. Consulting an attorney is strongly advised.

After working through the internal appeals process, if an insurer still denies a claim that the insured and his car accident lawyer feel should be covered, the insured may be able to sue under a number of different legal theories including, breach of contract, bad faith and in some cases infliction of emotional distress and fraud. The two primary remedies are breach of contract and bad faith. Under breach of contract the insured may be able to recover the value of the denied benefit and any incidental damages. Bad faith is the unreasonable denial of benefits and recovery may be available for emotional distress, interest on out-of-pocket losses, and car accident attorney’s fees.

In a perfect world all our accidents, whether in a car or out, would be covered by our insurance, but in the event they are not it is important to understand why and be able to question the denial. 

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