Auto Insurer: Your Attorney?

Auto insurance companies are obliged to defend their policyholders in the event of a car accident and subsequent lawsuit. This is known as the insurer's duty to defend. However, there are exceptions to this duty, and it is not always the case that an auto insurer will act as your attorney. For example, if the insured policyholder fails to notify the insurer of the accident within the specified time limit, the duty to defend may be voided. Another exception is if the accident was caused by an intentional act, such as drunk driving. In this case, the insurer may refuse coverage and deny the duty to defend. It is also important to note that the legal duties of an insurance company can vary from state to state.

When might an auto insurer not provide an attorney?

Auto insurance companies usually have a "duty to defend" you when you are sued after a car accident. However, there are some exceptions to this rule, and you may be responsible for hiring and paying for your own attorney.

• Failure to Notify Insurer: If you, the policyholder, fail to notify the insurer of the accident within the specified time limits in your insurance policy, they may not be obligated to provide you with an attorney. This is especially true if the delay has hindered the insurer's ability to investigate the accident or minimize losses.
• Intentional Act: Automobile insurance typically covers negligent actions rather than intentional ones. If you are accused of intentionally causing the accident, the insurer may refuse coverage and not provide a lawyer. For example, drunk driving may be considered an intentional act by some insurers.
• Policy Limits Reached: If the damages paid out by the insurer meet or exceed your policy's coverage limits, they may no longer be obligated to provide you with an attorney. Once the insurer has paid the policy limits, they may no longer have a duty to continue providing legal representation.
• Lack of Coverage: The insurer may argue that your policy does not cover the specific claim you are making. Examine your policy's exclusions to understand your coverage.
• Application Errors: The insurer may claim that misrepresentations or errors on your original application nullify coverage under the policy.
• Claim Errors: Check your policy for notification requirements and timelines for claims. Failure to adhere to these requirements may result in the insurer denying your claim and not providing legal representation.
• Insurance Fraud: Submitting false or exaggerated claims can be considered insurance fraud and may result in civil and criminal consequences.

It is important to carefully review your insurance policy and understand your rights and obligations. If you believe your insurer is unfairly denying your claim or not providing legal representation, you should consult with a qualified attorney who specializes in insurance law.

What to do if your auto insurer doesn't provide an attorney?

If your auto insurer does not provide an attorney, you may need to hire one yourself. Here are some steps you can take:

• Contact your insurer: Before taking any action, contact your insurer and ask them to confirm that they will not be providing an attorney. It is always best to get this information directly from the source to avoid any confusion.
• Review your policy: Carefully review your insurance policy to understand the terms and conditions. Look for any clauses that specify the circumstances under which your insurer will or will not provide legal representation. This information will be crucial in determining your next steps.
• Seek legal advice: Consult with a qualified attorney, preferably one who specializes in insurance law. They can review your policy and advise you on your rights and options. They can also help you navigate the legal process and protect your interests.
• Consider filing a complaint: If you believe your insurer is acting in bad faith or failing to uphold their obligations under the policy, you may want to consider filing a complaint with your state's insurance department or a similar regulatory body. This can help put pressure on your insurer and potentially resolve the issue without the need for further legal action.
• Pursue legal action: If all else fails, you may need to take legal action against your insurer. This could involve filing a lawsuit or initiating arbitration, depending on the terms of your policy. It is important to have a strong understanding of your legal rights and the specific details of your case before taking this step.

What is the duty to defend?

The "duty to defend" is an obligation that arises as part of all different types of liability insurance policies. It is an insurer's obligation to provide legal defence for a lawsuit, instead of just compensating the insured for the claim. This means that the insurance company will usually hire a lawyer to defend your case in court.

A duty to defend insurance policy gives your insurance company the right to defend your business against any lawsuits that might be covered by your commercial general liability policy. It empowers your insurer to decide which lawyers to hire and whether to settle or take the case to court.

To fulfil its duty to defend, your insurer must hire and pay for your defence counsel – even when the claim doesn’t end up being covered by your policy. This is the case even when there is only a potential for coverage and the claim is without merit.

There are key exceptions to the duty to defend. For example, if the insured policyholder fails to give the insurer notice of the accident, at least within the time limits specified in the insurance policy, the duty to defend might be voided. An intentional act causing the accident is another exception, as automobile insurance policies generally provide coverage only for negligent actions, not intentional actions.

Can I sue my auto insurer?

Yes, you can sue your auto insurer if they wrongfully deny your claim, underpay your claim and close it out, or otherwise act in bad faith.

Reasons for suing your auto insurer

You can sue your auto insurer for breach of contract if they are wrongfully denying your claim. Common grounds for suing an auto insurance company include:

• Not paying claims in a timely manner
• Denying properly filed claims
• Denying claims in bad faith
• Failing to defend you in a liability lawsuit
• Delayed or inadequate investigation
• Refusing to pay a claim where liability is reasonably clear
• Failing to act on the claim within a reasonable period
• Denying a claim without a valid reason

Steps to take before suing your auto insurer

Before suing your auto insurer, it is important to exhaust all possible options for resolving the dispute outside of litigation. Start by communicating with the insurance company directly and documenting all interactions. Consider filing a complaint with your state’s insurance department and consulting with an attorney specializing in insurance law. It is highly recommended to hire a lawyer if you decide to sue your insurer.

Evidence to support your case

To support your case when suing your auto insurer, you should gather the following evidence:

• Medical records relating to your injuries and treatment
• A written account of all losses resulting from the accident
• Insurance documentation, including claims filed and correspondence
• Witness statements from those present at the accident
• The police report from the accident
• Records of your car's condition, including photos
• Records of expenses incurred, such as repair bills, medical bills, and lost wages

Auto insurer's obligations

Auto insurers have certain obligations to their policyholders. They must:

• Abide by the terms of the contract
• Act in good faith
• Avoid unfair practices

Types of lawsuits

The types of lawsuits you can bring against an auto insurer vary depending on the state, but one type that remains constant is a breach of contract action. Many states also allow you to pursue a bad faith tort lawsuit, and you may be able to sue under your state's unfair trade practices laws.

What are my rights as a policyholder?

As a policyholder, you are the owner of an insurance policy. You are responsible for managing the coverage and paying premiums. Your name is on the insurance documentation, and you are insured under the policy.

• Right to not be declined by an insurance company based on discriminatory factors: All states in the US have laws that forbid insurance companies from refusing coverage due to discriminatory reasons, such as gender, age, religion, sexual orientation, or race.
• Right to cancel insurance: You can cancel your insurance policy at any time and explore more affordable options.
• Right to not be denied coverage based on credit history: Several states have enacted laws mandating insurance providers to accept new clients regardless of their credit history.
• Right to an explanation of denied coverage: In most states, insurance companies are legally required to explain why they have turned down your coverage.
• Right to acquire your driving record: You have the right to access your driving record. This is particularly important if you suspect there are inaccuracies in your records.
• Right of notice of cancellation or non-renewal: You have the right to receive prior notice if your insurance policy is cancelled or not renewed.
• Right to swift management of claims: When you file a claim, you have the right to expect a prompt and efficient claims process. Many states have established deadlines for insurance companies to settle claims.

It is important to note that your rights as a policyholder may vary depending on your location, as insurance laws and regulations differ by state. To fully understand your rights, it is recommended to consult your local state insurance department or seek advice from a qualified attorney.

Frequently asked questions