What to do if my insurance company denies liability for an accident and the other pary involved in the accident files in small claims court against me?

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What to do if my insurance company denies liability for an accident and the other pary involved in the accident files in small claims court against me?

I have a rear-ended car accident with a bus which costed me only $300 to fix my own car. I had a liability insurance at the time of accident. The total claims made were property damage of about $4,000. Later I received a letter from the company of the driver who was in collusion with me, demanding the full claims payment directly from me otherwise they are going to file in small claims court against me because my insurance company denies liability and refuses to pay $100 of the damages. I am not sure why my insurance company denies liability and refuses to pay. I don’t have any problem with my policy, coverage and my insurance was valid. I am not sure how to handle this situation and I need your advice in this matter. Who is going to pay if the judgment is against me and how will this affect my credit score?

Asked on October 9, 2016 under Accident Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If there is a judgment against you, *you* will have to pay it unless you insurer does. If you believe that under the terms of your policy, they should pay for your legal defense and/or any judgment against you, you could sue your insurer for "breach of contract"--for violating their obligation under the policy (which is a contract) to defend and/or pay against against you.
If there is a judgment against you and it is paid (by you, your insurer, or both of you), there will be little effect on your credit; however, unpaid judgments, like any other unpaid debts, will hurt your credit rating.


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