The Insurance Company Refuses to Pay for the Car Accident.

Question:  I was in a car accident.  Both me and the other driver know it was the other driver’s fault.  He contacted his insurance company and told them he was at fault.  Yet the insurance company still does not want to pay for the damages to my car.  What do I do?

Robert’s Answer:  I know these situations can be frustrating.  But you have to understand the role of the other driver’s insurance company.  Even though auto liability insurance is required in Texas, liability insurance is not there to protect the claimant.  Rather, liability insurance is there to protect the policy holder!  Liability insurance is protection you buy in the event you cause damages as a result of your liability.

Let’s take your situation for example.  Your car was damaged in an accident that everyone agrees is the other driver’s fault.  He reported the accident to his liability insurance company.  The insurance company opens a claim and investigates it.  This is because the insurance company is contractually required to defend their policy holder.  Likewise, the insurance company maintains exclusive control over the handling of the claim.  The insurance company can do whatever they want to do so long as they defend their driver.  This includes investigating the claim, settling the claim, hiring an attorney to defend any resulting lawsuit, and paying any final judgment rendered against their policyholder.

I always tell my clients to picture the other driver’s insurance company as nothing more than the other driver’s lawyer.  Their duty is to defend the policy holder much like an attorney defends a client.  So, do not be misled that the other insurance company is required to act in good faith towards you.  The other driver’s insurance company has no legal duty to you whatsoever.   You are considered an outsider to the policy.  You are a “third-party claimant.”

However. when dealing with some of the more established and reputable insurance companies, they might appear as though they are more helpful in third-party claims.  That is only because they believe that properly defending their policy holder means trying to settle your claim in the event fault is clearly established.  That is why you hear of insurance companies settling claims and paying for damages.

But when dealing with the smaller, low-rate insurance companies, they tend to reject and undermine many claims. This is because they know you are powerless to do anything about it especially if you are unrepresented by an attorney.  If you did not carry collision coverage on your car, then your only recourse is to file a lawsuit against the other driver.  You cannot sue the insurance company directly (much like you cannot sue the other driver’ attorney directly).  Remember to treat the other driver’s insurance company as his lawyer whose duty it is to protect and defend their client against your claim.

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