Third-Party Insurance Claims vs First Party
Let’s hope you’re never involved in a car accident. If you are, however, that accident will become the catalyst for a series of events. Depending on the seriousness of the accident, there may be medical bills, lost wages, and property damages to deal with. And insurance company representatives will almost always be involved via a first-party or a third-party insurance claim.
What Are Third-Party Insurance Claims?
In Texas, all drivers are required to carry a certain minimum of liability insurance coverage. Whenever someone has been involved in a motor vehicle accident with another driver where that other driver was deemed responsible, the injured party will likely file a claim with the responsible party’s insurance provider. These types of claims are called third-party insurance claims.
If indeed the other driver was responsible for the accident, their insurance company has a fiduciary responsibility to their policyholder to settle the claim in good faith. Likewise, if you were responsible for an accident and the other driver filed a claim with your insurance company, your insurance company has an obligation to you as a policyholder to settle the claim in good faith also.
With all third-party insurance claims, insurance companies have no legal obligation to the individuals who file them. Rather, they owe a duty of care to their insured policyholders to see that claims are adjusted in a prompt manner and settled fairly. If they don’t adhere to these requirements, under Texas law they may be held liable for additional damages and legal fees.
First-Party Insurance Claims in Texas
First-party insurance claims are basically the flip side of third-party claims. These claims are those one files with their own insurance provider if they were responsible for an accident that caused themselves injury.
In some cases, first-party insurance claims are necessary even if the policyholder was not responsible for the accident. Such claims may be filed in hit-and-run incidents or, more frequently, when the responsible party was uninsured or underinsured. This is where it pays to carry that extra coverage. If you think you’ll never be in a situation where the responsible party was uninsured or underinsured, you may want to think again. According to the independent, non-profit Insurance Research Council, an estimated 14 percent of drivers on Texas roadways do not carry the required amount of liability coverage.
Just as with third-party insurance claims, if an insurance company acts in bad faith and does not promptly adjust and fairly settle first-party insurance claims with its policyholders, they may be subject to additional damages, penalties, and legal fees that extend beyond their policy coverage.
What Is Bad Faith Insurance?
Motorists pay a lot for automobile insurance coverage, so their insurance companies should come through for them when they need help. Insurance companies, however, are in the business to make a profit, so every payout is a cut into their bottom line.
How are these two competing interests reconciled?
Because of the inherent advantage insurance companies hold over their policyholders who depend on their fair treatment, the insurance industry in Texas is closely regulated. Texas insurance code outlines various bad faith insurance practices, and it delineates set periods of time in which insurers must settle and pay claims.
An insurance policy is a contract between the insurer and the policyholder, and bad faith insurance refers to the tactics some insurers use to avoid these contractual obligations. Such practices include but are not limited to:
- Delaying sending an adjuster or assigning unqualified personnel to the task
- Requesting unnecessary or unreasonable information to slow the process
- Low-balling the value of a claim
- Leaving out portions of the claim in the adjustment process
- Failing to provide reasons behind their decision-making
- Misrepresenting policy terms
- Putting pressure on a policyholder to not hire an attorney
- Holding up payment of a claim
Policyholders that file bad faith claims must either by themselves or with the help of a skilled attorney prove the insurance company did more than simply make an error. They must prove the insurance company knowingly acted in bad faith.
How Do I Protect Myself?
No one likes to be taken advantage of, but it particularly hurts if it is by a person or company you put your trust in. When you purchase an insurance policy from a company in good faith, you expect that company to respond in good faith when you need it.
Unfortunately, there are companies that count on their policyholders becoming frustrated and giving up when it comes to arguing a claim. If you feel as a policyholder that your insurance company has not honored its contract, you need to understand your policy rights and fight to protect them
The first and best way to protect yourself from insurance companies that seek to deny or unfairly limit the coverage of your policy is to be aware of the requirements they and their personnel are mandated to follow. An insurance company must clearly communicate its policy terms and state whether your claim is covered within a specified period of time. Insurance companies must investigate, adjust, and settle claims within reasonable timeframes.
If you point out your insurance company’s bad faith practices and they continue to ignore you and dismiss your claim, the next best step is to reach out to a competent law firm. Let them know you mean business.
What to Do When You Suspect Bad Faith Insurance in Texas
Insurance companies are obligated to their policyholders to investigate, adjust, and pay claims promptly. If they disregard these obligations, not only might they be liable for bad faith practices, but they also may be in violation of Texas’ prompt payment statute. This could make them responsible for legal fees and damages.
Insurance bad faith cases can run into complex issues. If you expect your insurer has acted in bad faith on an insurance claim, contact the skilled, professional attorneys at the AP Law Group. Our attorneys will work with you to determine the best course of action for your bad faith claim. They’ll go to bat for you to get you the full compensation you’re entitled to. You should expect nothing less.
Call us today for a free consultation.