While insurance companies are regulated by the Department of Insurance in each state, they may try to deny valid claims and manipulate claimant files in order to appear that they are in compliance with the law. Most commonly, insurance lawyers represent people who have had an insurance claim denied, or who were subjected to a company’s act of bad faith. Insurance law also governs insurance fraud.
One of the most common legal issues associated with an insurance company would be when it wrongfully denies an insured person’s claim under their insurance policy. However, there are many instances in which the insurer’s denial of a claim is valid under the insurance policy. An example of this would be how an auto insurance company may deny the insured’s claim if it is proven that the insured was responsible for the accident, or was grossly negligent.
There are several legal theories under which an insured person may sue their insurance company, including:
- Failure To Pay On Time: Insurance companies have a duty to act in good faith. As such, if they do not make reasonable efforts to timely pay out a properly filed claim, the insured may be able to make a bad faith claim. Bad faith also occurs when an insurance company offers an unreasonably low amount of money in order to settle a claim;
- Failure To Represent: When the company refuses to defend the insured in a lawsuit against them, as provided under the insurance policy. If the insurance company accepts an unreasonably low settlement for the insured’s claim while representing them, the insured may also have a bad faith claim against the company; and
- Breach Of Contract: An insured may sue their insurance company if the company fails to follow the terms of the insurance policy.
What Is Automobile Insurance?
Automobile insurance is a type of insurance for cars, trucks, motorcycles, and other street legal vehicles. It primarily provides financial protection in the event of an accident, and against liability that may also result from accidents and other incidents in that vehicle.
Auto insurance is a contract between you and your insurance provider, in which you agree to pay a monthly premium. In exchange for this payment, the provider agrees to pay for your losses in the event of an accident, as long as those losses are covered by your specific policy.
In most states, auto insurance is required by law, and fees or penalties are imposed for driving without it. Auto insurance coverage is largely determined by:
- What policies your insurance provider offers;
- What policy you have purchased; and
- The specifics of that policy.
There are six basic types of automobile insurance coverage:
- Liability Coverage: Liability coverage protects the driver who harms another driver, or their property, while operating the insured vehicle. It is mandatory in most states, and there is generally a minimum amount that must be purchased. Auto liability insurance provides two main forms of protection: body damage liability, and property damage liability;
- Uninsured and Underinsured Motorist Coverage: Uninsured, or underinsured, motorist coverage helps protect you in the event that you are involved in an accident with a driver who either has no auto insurance coverage, or not enough;
- Comprehensive Coverage: Simply put, comprehensive coverage is a form of insurance coverage that helps if you are involved in an incident that is not a collision. It will help pay to replace or repair your vehicle if it has been stolen, damaged in an event that is not a collision, or damage from things such as fire, theft, vandalism, and falling objects. Financing or leasing a vehicle generally requires that you obtain and maintain comprehensive coverage, but is generally optional otherwise;
- Collision Coverage: Collision coverage can help cover repair or replacement costs if your car has collided with an object or another vehicle, or if your vehicle has rolled over. This type of auto coverage protects your own vehicle, whereas property damage liability coverage would pay for the damage done to the other driver’s vehicle. Collision coverage is generally optional, and is further discussed below;
- Medical Payments Coverage: Medical payments coverage can be part of an auto insurance policy, and could cover your or your passenger’s medical expenses in the event of a car accident that results in injuries. It is optional and not available in all states, but is required in others; and
- Personal Injury Protection: Often referred to as PIP coverage, it is a component of an auto insurance policy that covers medical expenses related to an auto accident, regardless of which driver was at fault. It will often include lost wages coverage and is only available in some states, while other states require PIP as a policy add-on.
What Is The Difference Between Collision And Liability Insurance?
To reiterate, collision insurance is automobile insurance that, regardless of fault, covers the repair or replacement of a vehicle as the result of an accident. Collision insurance pays for the damage to your vehicle, while liability insurance pays for the other driver’s property damage or bodily injury.
Additionally, collision insurance is usually only required when you have a lien on the vehicle; meaning, you are making payments, and the bank still owns the vehicle. Liability insurance is required for any car that you own.
Collision insurance will most likely require you to pay a deductible before the car is repaired. As such, the insurance company will generally give you a choice regarding how much you will have to pay in the event of an accident. However, the lower the deductible, the higher your insurance payments are each month.
If you have collision coverage, your insurance company will repair the car and proceed with the claim on your behalf against the other driver’s insurance company. This process is called subrogation. Although your insurance company should be demanding enough money to pay you back for your deductible, they are not legally obligated to do so; in which case, you may want to proceed with a legal claim against the driver personally.
If the other driver is clearly at fault but has no liability insurance, collision insurance will cover the damage to your car. It is important to note that even if you have uninsured or underinsured motorist coverage, it may not cover all of the repairs. If you get into a single vehicle accident, such as hitting a tree, collision insurance will cover the damage to your car because no one else was involved.
Companies use the following factors in order to determine the amount of the policy, as well as the premium that you will pay for your collision coverage:
- The price of the car;
- The durability of the car;
- How accessible the parts are and whether the car is difficult to repair; and
- Whether the car is a specific type that is frequently stolen.
When an accident occurs, the amount that is paid out will also depend on the nature and extent of the damage, as well as whether the mechanic used new or refurbished parts. Additionally, an insurance company will never pay more than the car’s cash value. This is because a company is only legally obligated to pay the market value of the car before the accident, minus the salvage value of the damaged vehicle.
Do I Need A Lawyer For Help With Issues With Collision Insurance?
When you file a claim with an insurance company, it is up to the insurance adjuster to determine whether your claim will be approved or denied. It is in the insurance company’s best interest to either deny your claim or pay the least amount possible. Additionally, there are often hidden provisions in the policy that will enable an adjuster to deny your claim.
Most states do not allow an individual to sue their insurance company directly, unless they denied a claim in bad faith. However, you can also sue the other driver personally for the damage. Whether you have a case against the insurance company for bad faith or the other driver, an experienced auto lawyer can assist you in ensuring that your legal rights are protected. Additionally, an experienced attorney will also be able to represent you in court, as needed.
