What to Do When Your Insurance Company Denies Your Claim
How to challenge a claim denial or underpayment
When your insurance company denies your claim or offers less than you think the damage is worth, you have the right to push back. South Carolina law requires insurers to handle disputes in a specific way, and you can move through several steps before going to court. The process starts with a written request to your insurer asking them to reconsider, moves to a formal complaint with the state if they refuse, and can end in binding arbitration or litigation if neither side backs down.
Most disputes get resolved at the first step — a simple letter asking the insurer to explain their decision in writing and consider your evidence. If that does not work, the South Carolina Department of Insurance can investigate for free. Only a small number of cases reach arbitration or court, but knowing the full path helps you decide how far to push.
Key Takeaways
- Request a written explanation from your insurer within 30 days of a denial or underpayment, and include photos, repair estimates, or other evidence that contradicts their decision.
- If your insurer does not budge, file a complaint with the South Carolina Department of Insurance, which will investigate at no cost to you.
- South Carolina requires most auto insurance disputes to go through binding arbitration before either side can sue, which is faster and cheaper than court.
- Keep copies of every document: the original claim, the insurer's denial letter, your evidence, and all correspondence with the company.
Asking your insurer to reconsider in writing
Start by sending a letter to your insurance company's claims department — not a phone call, because you need a paper trail. Address it to the claims manager or the address on your policy. State clearly what you are disputing: a denied claim, an underpayment, or a coverage decision you disagree with. Include the claim number, the date of the loss, and a brief explanation of why you believe the insurer is wrong.
Attach evidence that supports your position. For damage disputes, include photos of the damage, repair estimates from body shops, or an independent appraisal. For coverage disputes, include the relevant parts of your policy and any documents showing the loss was covered. For underpayment, include the repair estimate you received and explain why the insurer's valuation is too low.
Send the letter by certified mail with return receipt requested, so you have proof the company received it. The insurer must respond within a reasonable time — South Carolina does not set a hard deadline for this step, but 30 days is standard. If they deny your request again, they must explain their reasoning in writing. If they do not respond at all, that counts as a denial and you can move to the next step.
Filing a complaint with the South Carolina Department of Insurance
If your insurer refuses to reconsider or you are not satisfied with their response, you can file a formal complaint with the South Carolina Department of Insurance. This is free and does not require a lawyer. The department will investigate whether the insurer violated state law or their own policy.
Go to the Department of Insurance website and look for the complaint form, or call their consumer services line to request one by mail. You will need to provide your claim number, the date of the loss, copies of the denial letter, your evidence, and a written summary of why you believe the insurer is wrong. Submit the form and all supporting documents to the address listed on the form.
The department will send your complaint to the insurer and ask them to respond. This process typically takes 30 to 60 days. The department cannot force the insurer to pay you, but if they find the company violated the law, they can issue a citation and require the insurer to correct the problem. A department finding in your favor strengthens your position if you decide to pursue arbitration or a lawsuit later.
Understanding binding arbitration in South Carolina
South Carolina law requires most auto insurance disputes to go through binding arbitration before either side can file a lawsuit. This means a neutral third party — the arbitrator — hears both sides and makes a decision that both you and the insurer must accept. You cannot appeal an arbitration decision to court unless the arbitrator made a serious procedural error.
Either you or the insurer can request arbitration in writing. The request must include the claim number, a description of the dispute, and the amount in question. The insurer will respond, and you will both agree on an arbitrator or let the American Arbitration Association (AAA) appoint one. The AAA maintains a list of arbitrators in South Carolina and handles scheduling.
Arbitration is faster and less formal than court — most cases are decided within 60 to 90 days. You do not need a lawyer, though you can bring one if you want. You present your evidence and argument, the insurer does the same, and the arbitrator decides. The arbitrator's decision is final and binding on both sides. If the insurer does not pay after arbitration, you can take the arbitration award to court to enforce it, which is straightforward.
When to hire a lawyer
You do not need a lawyer to request reconsideration or file a complaint with the Department of Insurance. Many people handle these steps on their own and get results. However, a lawyer becomes useful if the dispute is large, the facts are complicated, or you are heading toward arbitration or court.
Some lawyers work on contingency for insurance disputes, meaning they take a percentage of what you recover instead of charging an hourly fee. This makes it easier to afford representation. Look for a lawyer who specializes in insurance law or bad faith claims — these are disputes where the insurer acted unreasonably or dishonestly. The South Carolina Bar Association website has a lawyer referral service, or you can ask for recommendations from friends or family.
If your claim is small — under a few thousand dollars — the cost of a lawyer may not make sense. In that case, handle arbitration yourself or decide whether the amount is worth the time and effort. If your claim is large or the insurer's behavior seems deliberately unfair, a lawyer can often recover enough to cover their fee and leave you ahead.
What "bad faith" means and when it matters
Bad faith is when an insurer denies or underpays a claim knowing it is wrong, or refuses to investigate fairly. South Carolina law allows you to sue for bad faith if the insurer's conduct goes beyond a simple disagreement about the claim value. Examples include ignoring evidence you provided, denying a claim without any investigation, or misrepresenting the terms of your policy.
Bad faith claims are separate from the dispute itself. You can lose the original claim dispute and still win a bad faith case if you can prove the insurer acted unreasonably. Bad faith lawsuits can result in damages beyond what the claim was worth, including attorney fees and sometimes punitive damages meant to punish the insurer for misconduct.
If you think your insurer is acting in bad faith, mention it in your written request for reconsideration and in your Department of Insurance complaint. Document every interaction and keep copies of everything. A lawyer can advise you on whether you have a bad faith case and whether it is worth pursuing.
Keeping records and building your case
The strongest disputes are built on clear documentation. From the moment you file a claim, keep copies of everything: the claim form, photos of the damage, repair estimates, the insurer's letters, your correspondence with them, and notes of any phone calls (including the date, time, and what was said).
If the insurer sends an adjuster to inspect the damage, take your own photos and video before and after the inspection. If the adjuster's estimate differs from repair shop estimates, get written explanations from the shops about why. If the insurer denies coverage, highlight the relevant parts of your policy and note where their interpretation conflicts with the policy language.
Organize everything chronologically in a folder — physical or digital. When you write your letter requesting reconsideration, reference specific documents and page numbers. This makes it clear you have done your homework and takes the guesswork out of the insurer's response.
Frequently Asked Questions
How long do I have to dispute a claim decision?
South Carolina does not set a strict deadline for requesting reconsideration, but do not wait. File your complaint with the Department of Insurance within one year of the denial or underpayment. If you want to pursue arbitration or a lawsuit, check your policy for any time limits it may impose, as these vary by insurer.
Can I sue my insurance company without going through arbitration first?
No. South Carolina law requires binding arbitration for most auto insurance disputes before you can file a lawsuit. The only exception is if your policy does not include an arbitration clause, which is rare. Even then, you should exhaust the complaint process with the Department of Insurance first.
What if the arbitrator sides with the insurance company?
You cannot appeal the arbitration decision to court unless the arbitrator made a serious procedural error or exceeded their authority. If you believe that happened, a lawyer can advise you on whether you have grounds to challenge the award. Otherwise, the decision is final.
Does filing a complaint with the Department of Insurance cost money?
No. Filing a complaint is free. The department investigates at no cost to you. However, if you hire a lawyer to help with your dispute, you will pay their fees unless they work on contingency.
What should I do if my insurer stops responding to my letters?
Document the lack of response and include it in your Department of Insurance complaint. Failure to respond to a policyholder's request for reconsideration can itself be a violation of state law. The department will follow up with the insurer and may issue a citation if they find wrongdoing.