Car insurers are increasingly likely to deny payments

Paying your car insurance every month is relatively easy. Getting your car insurer to pay you? Increasingly less so.

US auto insurers paid nothing on 45% of liability and medical claims they resolved last year, up from 35% of claims a decade ago, per a recent WSJ analysis of thousands of regulatory filings.

A peek under the hood

Liability and medical claims are intended to cover certain costs stemming from a car accident, like damage to another car when you’re at fault, or treatment for injuries.

Among the 10 largest auto insurers, the share of these claims closed without any payment has risen significantly over the past decade, with Liberty Mutual (29% → 54%), State Farm (26% → 47%), and Farmers (19% → 39%) seeing the biggest jumps.

What’s driving the trend? Short answer: it depends on who you ask. On one side, insurance companies say an uptick in fraud—driven in part by fake claims enhanced with AI tools—is triggering more denials, while also blaming attorneys for encouraging more consumers to sue.

• Meanwhile, consumer advocates argue insurers are intentionally making it difficult for customers to receive payouts in order to boost profits.
• Personal auto insurers paid out ~61 cents in claims for every dollar taken in premiums last year, their lowest net loss ratio since 2020.

Zoom out: The yearslong trend towards fewer payouts is similar to what’s been happening to US homeowners and their insurance coverage, the WSJ previously reported.