Can an ins company not pay a claim?

UPDATED: Oct 1, 2022

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Can an ins company not pay a claim?

I was hit by someone who ran a stop sign. Apparently, he only had 10k liability. His insurance company totaled the truck but then told us we needed to wait until they received a bill for the telephone pole the kid pushed me into. They received the bill and it exceeds the amount of his liability. Now we can’t get paid. We threatened with a lawyer and they said there is nothing they can do. How does a multi-million dollar company get top priority over us who live pay to pay?

Asked on February 11, 2018 under Accident Law, New Jersey


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The insurance company only needs to pay the total amount of his policy  limit ($10,000). When there is more than one claim, the insurer can decide which to pay, because all payments, except when you have sued and won, are voluntary; since any pre-lawsuit payment is voluntary, the insurer may decide whether and who to pay. Once they pay a total of $10,000 (the policy limit), the insurer's job is done: they have no obligation to pay any more, and if the insurer has paid out to the limit, they are done.
You can sue the driver who hit you: the fact that he had low insurance does not limit how much he may be responsible for--it just limits how much payment insurance will make for him. You may try to recover the money from the driver directly; bear in mind, however, that people with minimal insurance often have minimal income or assets and may not be able to pay. Even if you win in court, that does not make money appear where there is none, so if the defendant is insolvent, you may not be able to recover compensation.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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