Am I responsible for paying for a claim that is covered under my policy, if my insurance company refuses to pay?
Question Details:
After a car accident, a claim was made against me for loss of use, but my insurance company refuses to pay on account of insufficient evidence from the other party (to prove loss of use). The other party then decides to bill me directly and threatens to send my file to a collections agency. Now, my insurance admits that they will cover this cost if there's sufficient evidence, but takes no initiative to defend me, negotiate with the other party or to work towards a compromise. Do I have the legal right to demand my insurance company to take care of this? Will this affect my credit rating?
If you are at fault then you are ultimately the responsible party. Your insurance policy is an agreement between you and the insurance company for the company to pay valid claims when you are the responsible party. Your rights as to what you may demand of your insurance company are controlled primarily by your insurance policy. There are state laws as to what an insurance company must do in fulfillment of the policy terms and some laws as to what must be covered in the policy but in general your policy is the controlling factor. Most insurance policies provide that they will investigate a COVERED event and if your insurance company has determined that there is insufficient evidence from the other party to prove the claim against you (i.e. loss of use in your case) then it is their call as to whether they will negotiate a settlement or resist payment. If the insurance company fails to settle the case and you are sued then they will have the responsibility to defend you in the suit and they will provide you with an attorney to represent you in court. With regards to your rights, an insurance policy is viewed as a contract and state laws provide the framework as to the insurance company's role in fulfilling their part of the contact. If they have not done their part pursuant to state law and they have refused to pay a valid claim without good reason then you may have a claim against the insurance company for a breach of contract. You also asked if your credit rating would be affected, if a suit is filed the credit agencies will note the same on your records and that may affect your rating.
