Frequently Asked Questions about Insurance Law
Q: How do I file a claim with my insurance company?
A: The first thing to do is to read your written contract with your insurance company. If you do not have a paper copy, contact your insurance company and request a current copy. The process for filing a claim should be included in the terms of your insurance contract. If you have any questions, check your insurance company's Web site, contact your local insurance company representative, or call your insurance company's customer service number. Overall, read and become familiar with your policy. As an insured, you are responsible for reading the fine print and understanding the terms of your insurance policy.
Generally, insurance companies require notice of any loss for which you will be filing a claim. You should notify your insurance company of any loss within a reasonable period of time. Most policies require an insured to file a "proof of loss" document, describing the details of the loss, and attesting to the truth of the claim. Often an appraisal must be obtained to assess the value of property damage. In addition, the insured must take adequate steps to prevent any subsequent damage. Lastly, it is important to maintain good records, including receipts, warranties, proof of ownership, etc.
Q: What is uninsured motorist coverage?
A: Uninsured motorist coverage is provides benefits to an insured individual for any personal injuries suffered in an accident where the party at fault does not have insurance. These benefits are only paid to an insured individual if he or she is legally entitled to recover or the driver at fault is unknown, ex. a hit-and-run accident. This type of insurance is typically required in all 50 states by statute.
Q: What is underinsured motorist coverage?
A: Underinsured motorist coverage compensates an injured party in situations where the car insurance carried by the at-fault party is insufficient to cover the personal injuries of the other, in the event of an accident. For example, underinsured motorist coverage would come into play if the dollar limit of the at fault party's insurance policy is lower than the automobile liability insurance or the underinsured motorist coverage of the insured injured party. This type of coverage is generally not required by statute, however many insurance companies include this type of coverage in their policies.
Q: I was in an accident, does my insurance company have to defend me?
A: Generally, most insurance policies include language that places the duty to defend any action brought by a third party against an insured individual on the insurance company, as long as the action is covered by the insurance policy. An insurance company is obligated to defend an insured party even if one of the allegations is false, groundless, or fraudulent. Thus, even though your insurance company may have a duty to defend you, it may not necessarily be obligated to pay you any money under your policy.
Q: I don't want my insurance company to defend me, but they say I have to use their defense team. Can't I hire my own representation?
A: Generally, an insurance company has the right to defend any insured party. However, an insured party can choose not to use the insurer's defense, but the insured will then likely be required to pay his or her own costs and attorneys fees involved in the defense. If a conflict of interest arises between an insured individual and the insurer, the insured can choose to refuse representation by the insurer's attorney and may then be able to charge the insurer for reasonable costs and attorneys fees arising from the insured's seeking and obtaining his or her own defense.
Q: My insurance company paid me for my claim and now I am being taken to court for another action deriving from the same accident. My insurance company says they are no longer under any obligation to defend me because they paid out the proceeds. Is this true?
A: There are differing viewpoints on whether payment of proceeds under an insurance policy discharges the insurance company obligation to defend an insured party. Some courts have held that once insurance companies have compensated the insured party for the full amount the insurance company can be liable for under the policy, they have fulfilled their obligation and no longer have a duty to further defend an insured individual. Other courts believe that an insurance company's duty to defend is independent and separate from the obligation to compensate the insured. Generally, if your insurance company has begun to defend you, they cannot prematurely withdraw from the litigation.
Q: My insurance company failed to defend me in an action brought by a third party. What kind of damages can I get?
A: If an insurance company fails to uphold its duty to defend an insured individual against a third party claim, the insurance company may be held liable for damages. These damages may include attorneys fees the insured party paid out to retain his/her own defense, the judgment or reasonable settlement amount between the third-party and the insured, and damages that compensate the insured party for any suffering that resulted from the insurance company's failure to defend the insured party.
Q: What is a bad faith insurance claim?
A: A bad faith insurance claim involves, amongst other scenarios, an insurer wrongfully failing to pay a claim for no reason. Situations that can result in a bad faith insurance claim include a delayed claim investigation, an insufficient claim investigation, unreasonable delay of payment, and unreasonable denial of claim benefits. In a bad faith insurance claim, the insurance company often believes the claim is not covered under the insurance policy, and thus denies the claim. A bad faith cause of action has been adopted by most states to protect insured individuals in their interactions with their insurance companies. This cause of action is based on both tort and contract principles. Inherent in every insurance contract is an implied covenant of good faith and fair dealing on both sides of the contract. However, just because your claim has been denied, does not mean you have a valid bad faith insurance claim.
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