DEALING WITH THE OTHER DRIVER’S INSURANCE COMPANY IN CAR AND MOTORCYCLE CRASH CASES

I touched upon this a little in an earlier blog entry. The best advice that I can give someone who is contemplating handling a car crash or motorcycle accident claim against the other driver’s insurance company without a lawyer is: WATCH OUT.

People are often surprised by the minimal to nonexistent obligations that are owed to them by someone else’s insurance company. That is because the insurance relationship is essentially contractual. Because you do not have a contract with the other driver’s insurance company, that insurer owes you nothing until you agree to a settlement with it, at which point you do have a contract. But that contract will only require the other driver’s insurance company to pay what you agreed to take to settle, and that is it.

This situation can be summarized with one sobering fact: Some of my clients who get frustrated with the other driver’s insurer file a complaint with the Iowa Insurance Commissioner. The number of times that the Insurance Commissioner has done anything in response to such a complaint? Zero. My clients always get the same response — someone else’s insurance company has no obligations to you.

Here are a few points in response to questions about the other driver’s insurance company that I often get from my car crash clients:

1. The insurance company does not have to offer to pay you any money if it believes in good faith that that is the correct decision.

2. The insurance company can reject some or all of your claimed injuries and medical expenses if it has a good faith basis for doing so.

3. The insurance company will never have to pay any of your attorney fees.

4. There are no set time limits on when an insurance company has to respond to you.

5. The insurance company does not have to, and will almost certainly refuse to, give you any advice concerning your legal rights or the value of your claim.

6. The insurance company can stand by, watch you accept an unfair settlement offer, and say nothing and that settlement agreement will still be enforceable.

7. The insurance company can immediately contact you and try to get you to settle before you retain a lawyer and before you realize what all of your legal rights may be and that settlement agreement will still be enforceable.

8. You can decide after the fact that your settlement agreement was not fair and that you should have consulted an attorney and that settlement agreement will still be enforceable.

9. All settlement agreements include a waiver of future claims arising out of the same crash, so if you settle your case for an insufficient amount and later require additional medical care and miss more time for work, that settlement agreement will still be enforceable and you will not be able to go back to the insurance company and ask for more money.

I mentioned above that some insurance matters are governed by a “good faith” standard. Any bad faith on the part of the other driver’s insurance company would only give a claim to the other driver, not you, unless the other driver legally “assigns” the bad faith claim against the insurance company to you.

The bottom line is that it is a very bad idea, no matter how minor the collision, to enter into a settlement agreement with the other driver’s insurance company without hiring a personal injury or wrongful death attorney to advocate for you and protect all of your interests and legal rights.

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