What can be done if someone accused me of theft and filed a claim on it and got paid? What can happen legally to me?

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What can be done if someone accused me of theft and filed a claim on it and got paid? What can happen legally to me?

Can the insurance company be sued if I made them aware of the fraud and they still paid the claim?

Asked on March 25, 2009 under Insurance Law, Texas

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Let's make sure we understand this.

We assume you're saying a third party accused you of theft, filed a claim with his or her insurance company, and his or her insurance company concluded the claim was justified and paid the claim to the third party. You believe the insurance company was being defrauded by its policyholder, you told the third party's insurance company you did not engage in theft, you were not responsible for any loss, and that in your opinion their insured was defrauding them. Now you are asking us if you can you sue the third party's insurance company for paying the claim.

While anyone can sue anybody for anything, what you really are asking is whether or not you could SUCCESSFULLY sue the 3rd party's insurance company for paying an improper claim to the third party.

The 3rd party's insurance company makes its own decisions on what claims it will and will not pay. It owes its insured a duty of good faith. There is really nothing to you can do to prevent the insurance company from paying a claim that it it not obligated to pay, so long as it is using its own money to pay the claim. Insurance companies actually pay many claims that they probably could deny and defend as sometimes they do not want to take the risk of challenging the claimant and risking charge that they are acting in bad faith by denying the claim, and/or it is wiser or less expensive to pay a claim than to litigate or risk litigation.  That's a standard part of the insurance business.

Sometimes an insurance claimant may think Mr. X caused the loss, and report that to his or her insurance company, and the insurance company will pay the loss even if it concludes Mr. X had nothing to do with the loss. Why, sometimes it is irrelevant who caused the loss, because so long as the loss occurred the insurance company would be liable -- the who did it is not necessarily critical.

When an insurance company pays a loss it takes back a right of subrogation. That gives the company the same right as the insured had to make a claim against the person causing the loss. If the insurance company chooses to do so, it could sue the person it believes caused the loss on which it paid its policyholder.

If the insurance company believes it can prevail, it eventually may sue you, under its right of subrogation, for the loss it paid out. You could then defend. But you can't successfully bring suit against the claimant's insurance company just because it paid the claimant.

I am not discussing issues as to whether the claimant may have defamed you in his or her statements to the insurance company. Successful suits for libel and slander are rare.


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