Can I appeal if my car insurance does not pay me enough?

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Joel Ohman
Founder, CFP®

UPDATED: Oct 31, 2016

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Here's what you need to know...

  • Car insurance underpayments are much more common than you might think
  • Insurance companies’ customer service is at its best when you are paying premiums, not when they have to pay a claim
  • If you feel that you have been underpaid on a car insurance claim, you can and should appeal it

Insurance providers try to protect their own bottom line but paying out the bare minimum or less. Appraisers who work for them make it easy to do so.

If you want to make an appeal, you will need to begin with an internal appeal to your insurance company. If that doesn’t work, you can try an objective external appeal.

Learn all about the auto insurance underpayment and appeal process below and then be sure to enter your ZIP in the box above to start finding the best car insurance!

What is bad faith in regard to insurance companies?

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When you sign up with an insurance company to help protect you and your assets in the case of an accident or other mishap, you expect the company to treat you fairly.

In fact, each state lays out specific legal obligations for how an insurance company is supposed to act in the policyholder’s or client’s best interest.

The Insurance Regulatory Examiners Society was formed to protect consumers in cases of dishonest and unfair insurance regulation.

When an insurance company does not act in an honest and fair way, it is called bad faith. There are a number of ways in which bad faith may occur.

Some examples of bad faith are:

  • Denying coverage
  • Delaying claim payment for an unacceptable amount of time
  • Denying claim payment
  • Undervaluing and underpayment of claims
  • Refusal to investigate a claim in a logical way
  • Refusing to reimburse or settle claims
  • Unjust cancellation of your policy
  • Unreasonable claims processes

Do Your Research

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The first thing you should do is to arm yourself with information. Ask for a detailed explanation of the amount that they have proposed to pay you. If the person you are speaking with cannot provide the information to your satisfaction, ask to speak with a supervisor.

You should ask for copies of all paperwork relating to the claim, including the appraisal if you do not already have a copy. Carefully review your car insurance policy documents to look for anything that might help your case.

If you see wording about fair market value or incidental loss coverage, you have a strong case for appeal.

The next thing you will want to find out is how the formal appeal process works. Ask your agent or another representative of the insurer about it. Your insurance company must provide this information.

However, to guarantee compliance and honesty, you should document all contacts you have with the company, including date, time, who you spoke with and what was discussed. This documentation will form part of the paperwork for your appeal.

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Filing the Appeal

In order to make sure your appeal is considered you must follow the instructions carefully. Fill out the form completely, making sure that each field is complete. If you omit information, it may provide grounds for denial of the appeal.

Be sure to include any pertinent information that may support your claim of underpayment. You may want to include Kelly Blue Book documentation showing that your vehicle is valued higher than the insurance company has determined.

You may also want to hire an independent appraiser to make an appraisal of the damage to your vehicle.

He or she is obliged to submit a copy of the appraisal to both you and the insurer. This will greatly help your case.

Be sure to include a letter outlining any supplementary information about your claim and why you feel it is an underpayment. Include all your supporting documentation.

Be sure to state how much you feel the insurance company should pay and what you have based the amount on. File the formal appeal according to the directions provided and make sure you submit it to the correct address.

The Results of your Claim Appeal

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It will take time to get the final decision concerning your car insurance claim appeal.

In the interim, many insurers will even make you an offer you for more than the original amount but less than the amount you are demanding in order to get you to stop your appeal. Their hope is that you will settle for a compromise in the interest of expediency.

However, if you can afford to wait on the results of the appeal, you should do so.

In fact, by replacing your insured property without waiting for the payment from the insurer, you will be in a much better position for the evaluation of the appeal.

When you are looking for car insurance and comparing the different companies out there, one of the most important things to do is find out how they handle claims.

If you get a glowing recommendation from someone who has had to make major claims, you know that you have found a trustworthy company. A recommendation from someone who has never made a claim holds much less weight.

What do you do if you are not happy with the appeal results?


If the insurance company denies your appeal or still offers you less than you believe you deserve, there are a couple of routes that you can take.

  1. One is to contact your state’s department of insurance. They offer a way to appeal through their office and they will usually investigate it themselves, without any pressure from the insurance company.
  2. Another way you can go is through an attorney. You should only go this route if you have tried everything else and have not gotten the results you want.

Keep in mind that an attorney will be expensive so if you don’t really feel like you have a case, you may want to simply accept the offer from the insurance company.

Finding the Best Car Insurance

Start the search for car insurance by using our online quote tool for a variety of quick and easy quotes to help you get started finding the right insurer.

Enter your ZIP code below and you can get started right now!

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