What Should You Do Immediately After Your Claim Is Denied?

Claim denied? Don't accept it. We detail common rejection reasons and provide a step-by-step process to appeal the decision and fight for coverage.

DeWealthy ~ Evidence Needed for Car Insurance Claim

Update: Nopember 2025    Author: DeWealthy Legal Team

Category: Insurance Law & Auto Accidents

The "First Response": 

Don't Panic, Don't Argue

Receiving a denial from your insurance company is financially terrifying and emotionally draining. However, in the insurance industry, a denial is often considered the opening move of a negotiation, not the final verdict. Automated claims software often flags legitimate claims due to minor administrative errors or lack of evidence.

Immediate Action Item: If you received a denial over the phone, stop talking. Do not argue or get angry. Politely end the call and wait for the official Denial Letter. You cannot fight a vague verbal rejection; you need the specific policy code they are citing in writing.

Tip: While you wait for the letter, review the basics of the process. If you are unsure if you filed correctly in the first place, review our pillar guide: What Are the 10 Critical Steps to a Successful Auto Claim? to ensure you didn't miss a fundamental step.

Phase 1: 

Decode the Denial Letter

Under the Unfair Claims Settlement Practices Act (which varies slightly by state), insurers are legally required to explain why they are not paying you. They cannot simply say "No."

When the letter arrives, look for specific language. It will usually fall into one of four buckets.

Common Reasons for Claim Denial

Denial Category	What It Means	Difficulty to Appeal
Administrative / Lapsed Policy	You didn't pay premiums on time, or you missed the filing deadline.	Very Hard
Coverage Exclusion	The driver wasn't listed, or the specific type of damage isn't covered.	Moderate
Liability Dispute	The insurer believes you were more than 50% at fault (in modified comparative negligence states).	High Success Potential
Bad Faith	The insurer failed to investigate or is delaying without reason.	Requires Lawyer

Phase 2: 

The Evidence Gathering Workflow

To overturn the denial, your opinion doesn't matter—only your evidence does. You must build a "paper trail" that objectively disproves the insurer's stated reason for denial.

1. The Police Report (Crucial)

If the insurer claims you were at fault, but the police report says otherwise, you have a strong case. If the police report contains errors, contact the officer immediately to request an amendment.

2. Visual Evidence

This is where preparation pays off. High-definition video footage is the single best way to dispute a "he-said, she-said" liability denial.

Recommendation: If you don't have one yet, investing in a high-quality 4K Dash Cam with GPS Logger (Thank you, I get affiliate commission from your purchase transaction on Amazon.) is essential for future protection. It records speed and location, which can prove you weren't speeding.

3. Medical Records

For injury claims, you must link the pain directly to the crash date. A gap in treatment gives them a reason to deny coverage.

4. Organization

Keep every email, letter, and receipt.

Recommendation: Use a dedicated Fireproof Document Organizer (Thank you, I get affiliate commission from your purchase transaction on Amazon.)** to keep your title, policy, denial letter, and medical bills in one place. Losing a receipt often means losing reimbursement.

Phase 3: 

How to Construct and File Your Appeal

The "Internal Appeal" is your formal request for the insurance company to reconsider. Do not simply re-send the original claim. You must add new information or clarify the mistake.

The Appeal Letter Structure:

• Header: Claim Number, Date of Loss, Policy Number.

• Opening: Clearly state, "I am appealing the denial of claim [Number] dated [Date]."

• The Rebuttal: Quote their denial reason, then quote the specific section of your policy (Declarations Page) that contradicts them.

• The Proof: "Attached is [Evidence X] which demonstrates..."

• The Demand: "Please review this new evidence and respond within [State Law Timeframe, usually 15-30 days]."

Phase 4: 

Escalation (When the Appeal Fails)

If the internal appeal is rejected, you have two remaining options before a lawsuit:

1. External Review (Department of Insurance)

Every state has an Insurance Commissioner. You can file a consumer complaint. The state will contact your insurer and ask for an explanation. This often pressures insurers to settle if they are on shaky ground.

2. Consult an Attorney

If your damages are significant (totaled car or medical bills over $5,000) and the insurer is stonewalling, you may be a victim of Bad Faith Insurance. This is illegal. A lawyer can often unlock settlements far higher than the original claim value.

FAQs

How long do I have to appeal a car insurance denial?

• Time limits vary by state and by specific insurance policy, but generally, you should file your intent to appeal within 30 to 60 days of receiving the denial letter. 

• Check the "Appeals" section of your policy document immediately.

Can I sue my insurance company for denying my claim?

• Yes, but usually only after you have exhausted the internal appeals process. 

• If the insurer acted unreasonably, you might have grounds for a "Bad Faith" lawsuit, which can include damages for emotional distress and legal fees.

Will a denied claim still raise my insurance rates?

• It depends. If the claim was denied because you were found "at fault" but the damage wasn't covered (e.g., you didn't have collision coverage), the accident will still appear on your CLUE report and likely raise your rates. 

• If you were not at fault, it should not impact your premiums in most states.

Conclusion

A denied claim is a hurdle, not a wall. By remaining calm, gathering objective evidence like dashcam footage and police reports, and following a structured appeal process, you can often reverse the decision. Remember, insurance companies are businesses protecting their bottom line—you must be the CEO of your own recovery.

If you are just starting the process or need to refile completely, make sure you review the 10 Critical Steps to a Successful Auto Claim to ensure your paperwork is bulletproof.

Reference

• National Association of Insurance Commissioners (NAIC) - Consumer Guide to Auto Insurance.
• URL:   https://content.naic.org/sites/default/files/publication-aut-pp-consumer-auto.pdf
• Insurance Information Institute (III) - Understanding the Claims Process.
• URL:   https://www.iii.org/article/understanding-the-insurance-claims-payment-process
• Legal Information Institute (Cornell Law) - Bad Faith Insurance definitions.
• URL:   https://www.law.cornell.edu/wex/bad_faith