Yes, car insurance companies can deny claims in New Jersey, and they do so for specific, legally permissible reasons. The most common grounds for denial involve policy violations by the driver, such as driving without a valid license, driving under the influence of alcohol or drugs (DUI), or using the vehicle for a purpose not covered by the policy, like ride-sharing without proper commercial coverage. Understanding the terms of your policy is critical to avoiding a denial.
A frequent and serious reason for denial is material misrepresentation. This means providing false or significantly incorrect information on your insurance application, such as underestimating annual mileage, listing an incorrect primary garaging address, or omitting a high-risk driver from the policy. If discovered during a claims investigation, this can void the policy altogether.
In New Jersey, which operates under a "no-fault" insurance system for medical expenses, your own Personal Injury Protection (PIP) coverage pays your medical bills regardless of who caused the accident. However, a claim can still be denied if you fail to meet specific state requirements, such as not seeking initial medical treatment within 10 days of the accident for soft tissue injuries under the "Limited Right to Sue" (verbal threshold) option.
To protect yourself, always report any accident to your insurer promptly, provide complete and accurate information, and cooperate fully with their investigation. If your claim is denied, the insurer is required to provide a written explanation. You have the right to appeal the decision through the insurer’s internal process or by filing a complaint with the .
| Common Reason for Claim Denial in NJ | Description | Example Scenario |
|---|
| Policy Lapse | The insurance policy was not active at the time of the accident due to non-payment of premiums. | A payment was missed, and the policy was canceled two weeks before the collision. |
| Excluded Driver | The person driving the car was specifically excluded from the policy. | A friend who lives in your household but is not covered was driving your car. |
| Unreported Vehicle Modification | Significant performance or cosmetic changes were made to the vehicle without informing the insurer. | Installing a turbocharger or a lift kit that was not declared. |
| Failure to Cooperate | The policyholder did not provide necessary documentation or statements for the investigation. | Refusing to provide a recorded statement or repair estimates. |
| Intentional Act | The damage or loss was caused intentionally by the policyholder. | Deliberately crashing a car to collect the insurance money (fraud). |
| Unlisted Resident | A licensed driver living in your household was not listed on the policy. | Your adult child who moved back home was not added to the policy. |
