If you do not report your claim when you should, your insurer will not automatically decline your coverage. Their actions depend largely on the circumstances. If your claim involves significant injuries or your delay prevents them from adequately investigating, evaluating, and reserving the claim, they may take action. If your delay consequentially jeopardizes their ability to protect your legal rights (you let a lawsuit go into default, the other driver has severe injuries, etc.), an insurance company considers taking action to protect their rights. Reservation of rights letter: Even when an insurer feels their insured prejudiced their case, they still need to understand their potential exposure. A reservation of rights letter explains to an insured that the insurer will continue to investigate their claim, but they reserve the right to deny coverage later. By notifying an insured of their course of action, an insurer can continue their investigation while minimizing the expectation that they will pay the claim. Declination of coverage/claim denial: Sometimes, an insurer decides that an insured’s actions jeopardized a case so much they refuse to provide coverage. When appropriate, they decline coverage to the insured. If the insurer is considering paying a third-party claim, they inform the other parties that they will not pay because their insured’s coverage is no longer valid. Declaratory judgment lawsuit: Sometimes, an insured’s inaction gravely jeopardizes the insurer’s rights. When this happens, they sometimes file a lawsuit asking for a declaratory judgment. A court looks at the evidence, evaluates the policy, and decides whether the insurer must honor the claim.