Am I responsible for paying for a claim that is covered under my policy, if my insurance company refuses to pay?

UPDATED: Mar 8, 2012

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Am I responsible for paying for a claim that is covered under my policy, if my insurance company refuses to pay?

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?

Asked on March 8, 2012 under Accident Law, Arizona


DRichard White / MoKan Personal Injury Group

Answered 10 years ago | Contributor

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.

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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