Auto insurers are deeply committed to their mission of helping their policyholders in their time of need and are dedicated to processing claims quickly, accurately, and fairly, but a recent Wall Street Journal article on auto liability and medical claims closed without payment uses a sensational headline that risks leaving readers with the false impression that insurers routinely fail to pay valid claims. That characterization is far from the truth and repeats a false narrative already leveled against property insures. Over the last five years, auto insurers have paid more than $1 trillion in personal auto claims.

FACT: The Journal's own analysis found that auto insurers are paying physical damage claims at essentially the same rate today as they were a decade ago. There is no upward trend in claim denials for policyholders who are trying to repair or replace their cars.

• The claims for which the Journal identified an upward trend are auto liability and medical claims that are closed without payment.
• Auto liability and medical claims are a magnet for billboard lawyers and fraudsters seeking to profit off the system, which is why these claims are investigated thoroughly. It is important that insurers do not pay meritless claims to control the cost of coverage for all drivers.

FACT: An auto liability and medical claim closed without payment does not mean insurers are wrongfully denying claims. There are a variety of reasons why a claim may be closed without payment, including:

1. For potential liability claims made against an insured driver, multiple claim files are often created for the other vehicles and their occupants and then closed when it's determined the insured driver is not at fault or the other occupants are not injured.

• For example, a crash might involve two cars, each with a driver and a passenger, which could trigger multiple claim files being created.
  • Claim files may be created for damage to the other car, its driver and passenger.
  • Claim files may be created for the insured's passenger for liability and/or medical payment/personal injury protection/no fault claim.
  • There could be claim files created for damage to the insured vehicle, and a medical payment/personal injury protection /no fault claim for the insured driver.
  • Any or all these claims could be closed if it was determined that the individuals were not injured, or the vehicle owner did not wish to make a claim.

Big Picture:

• Insurers often create claim files for the potential of a claim being made and close them once it is determined that there is no injury or claim being made.
• These claims are not denied and can be reopened at any time within statutory time frames.
  

2. The Cost of Damage Falls Below the Deductible

This is one of the most common reasons for a claim to be closed without payment.

• On first party claims (i.e. a claim you file yourself as the policyholder), damage has occurred to your vehicle, but repair costs are less than the deductible. Therefore, no payment is issued, but the claim is not denied.
• For example, a fender bender causes $400 damage, but the deductible is $500.

Big Picture:

• Some policyholders opt to increase their deductible as a way to lower their monthly premium costs.

3. The policyholder reports a claim but did not purchase property damage coverage (also referred to as collision or comprehensive coverage) for the vehicle.

The average vehicle on the road today is over 13 years old, and some policyholders choose to drop property damage coverage for low value vehicles as a way to lower their monthly premium costs.

Big Picture:

• While dropping physical damage coverage can result in significant savings, policyholders must ensure that any loan used to purchase the vehicle is paid off, and that they are financially prepared to repair or replace the vehicle without the aid of an insurance payment if it should be damaged or totaled in a crash.

4. There is No (or Insufficient) Damage

Sometimes a policyholder submits a claim and the adjuster finds:

• No physical damage.
• Damage unrelated to the reported event.
• Wear and tear or pre-existing issues.

These circumstances may lead to communication with the customer without issuing a formal denial. The policyholder may simply accept the finding, and the claim is closed with no payment.

5. The Claim is Withdrawn by the Policyholder

The policyholder may withdraw the claim after filing it because:

• They decide to pay for repairs themselves.
• They are concerned about the impact on their premium.
• Repair quotes come in lower than expected.
• The claim was opened in error.

Once withdrawn, it must still be recorded as closed without payment, but the claim has not been denied.

6. There is a Lack of Required Documentation or Inactivity to Process the Claim

An insurer may administratively close the claim for inactivity if the policyholder does not:

• Allow inspection of the damaged vehicle
• Submit repair estimates.
• Respond to requests for inspection or repair estimates.

This is not a denial. The policyholder can usually reopen the claim within the statutory or contractual timeframe.

7. The Claim is Filed for "Information Only"

Some policyholders file a claim to:

• Ask if damage is covered.
• Plan to pursue a claim with the "at fault" drivers' carrier but want a claim created in case a dispute arises with the other driver's carrier.

If they choose not to proceed, the claim closes with no payment.

FACT: Claims handling practices are rigorously governed by state laws and regulations. Consumers have recourse through their state department of insurance if they feel their claim is not being handled fairly.

• Insurers operate under robust state oversight, with insurance departments enforcing strict market conduct standards.
• State insurance departments conduct regular audits and investigate consumer complaints, they and have the authority to require corrective action.