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You have complied with the financial responsibility laws of the State of California by purchasing automobile insurance in case of an accident. You then become involved in an accident, submit your claim to your insurance carrier, only to be told that they are now denying coverage to you for the motor vehicle accident. How can this happen?

While automobile insurance is required, as a purchaser, you must select the type and extent of coverage necessary to protect yourself. On many occasions, “full coverage” is not as it seems, and you have purchased limited insurance covering bodily injury and property damage. There are many potential other types of coverage available to an insured, including collision, comprehensive, uninsured/underinsured motorist, medical payments coverage, rental car coverage and others. Should you be involved in a motor vehicle accident, and not have the proper coverage to receive benefits, your insurance company will deny that claim.

An automobile insurance carrier may also deny a claim if you were driving illegally. An example of that, is driving while under the influence of alcohol or drugs at the time of the accident. Although this is a common basis to deny coverage, many automobile insurance carriers will proceed to provide legal representation to the insured, under what is referred to as a “reservation of rights.” Other potential reasons for denial of coverage for violation of law,
are driving without a valid license, driving on revoked or suspended license, and potentially driving without valid automobile insurance coverage.

An automobile insurance carrier may also deny coverage on the basis of a fraud. Fraudulent issues could include the failure to report an automobile accident to either law enforcement authorities or your insurance company. It may also include failure to obtain immediate medical attention, creating a question as to whether there actually: (1) was an accident or, (2) injuries caused by the accident.

Another potential issue of fraud is whether you are driving a vehicle with the permission of the owner of a vehicle. While automobile insurance generally flows with the vehicle, a potential denial of coverage is the owner stating that permission was not granted to drive the motor vehicle. Coverage determination becomes a factual question as to the availability of the vehicle for use, previous usage of the vehicle, prior permission granted to use the vehicle, and potentially the accessibility of the automobile or keys for use of the automobile. Denial of coverage based on lack of permission is also potentially a fraud if the facts and circumstances are untrue.

Denial of an automobile liability insurance claim is not the end of the world. There are other avenues available, including claims to the Department of Insurance or seeking the advice of attorneys skilled in the evaluation of injury claims and coverage issues. The first step would be to negotiate with your insurance company and receive a clear and concise reason for the denial of claim, followed by speaking to an attorney about representation to assist in resolving the claims dispute.

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