What Happens When an Insurance Claim Is Made against You?

If you are involved in a car accident or any other kind of mishap, there is a high probability an insurance claim will be filed against you. It’s a virtual certainty that a person who suffered injuries or whose property was damaged in the incident would want to make a claim against you to cover the cost of any hospitalization or property repair or replacement costs. 

Most of the time, this claim will be handled through an insurance provider. If someone files a claim against you, you must know the right steps to take to minimize your financial exposure. To help you navigate the insurance claims process, you can work with an insurance claims lawyer near you.

When an insurance claim is filed against you, it simply means that a third party is seeking to be reimbursed for damages they suffered as a result of the incident in which you were involved. Their claimed damages could include a personal injury with medical bills and claims for lost wages and pain and suffering or losses for property damages. 

If you have an insurance policy that covers the accident, which is usually the case, your insurer will pay any valid claim for compensation. Occasionally, the third party will go directly after your insurance company. This is called a third-party claim. In these instances, assuming that insurance premiums have been kept current and the insurance claim turns out to be valid, your insurer will cover any expenses.

This is one of the most common questions arising from an accident, especially for those people encountering this situation for the first time. 

If you were involved in an auto accident and exchanged insurance details with the other driver, then your insurance company would notify you of a claim filed against you. As would have been expected in this situation, the third party would make the necessary notification to the insurance company, usually through their attorney.

If, on the other hand, the third party does not have your insurance details, they would still be able to make a claim against your insurance by retrieving your identification and insurance information from the state division of motor vehicle registration. Thus, in such a case, you will similarly be made aware by your insurance company that a claim has been made by a third party.

Note, however, that you should not wait until your insurance provider has contacted you about a claim against your insurance.  It is your responsibility to inform them about the claim when the third party directly contacts you to seek compensation. In fact, many insurance policies require you to give the insurance company notice of an accident when it occurs or shortly thereafter. If your policy includes a notice requirement, failing to inform them of the accident could cause the company to attempt to exclude coverage because of the policy violation. If your insurance company ever denies coverage for your alleged failure to notify them of an accident, you should contact an insurance claim lawyer immediately to enforce your legal rights.

There are different types of insurance claims, as there are different types of loss, damage, or liability that insurance policies cover and indemnify against. Some of the most common types of insurance claims are:

With respect to car accident and other loss claims, these can be further classified depending on the fault attributable to the insured:

An insurance claim is a formal request sent to your insurer demanding compensation for losses covered under your insurance policy in case you do not manage to persuade the damaged party to sign a car accident release of liability form. It apprises your insurance provider of the incident and triggers an insurance claim review, which, if successful, leads to an insurance settlement in favor of the party seeking compensation.

A “bad faith” insurance claim is one where the insurance provider refuses to pay an otherwise legitimate claim or fails to do its duty to promptly evaluate and attend to an insurance claim. It is called such because insurance companies, as entities under public regulation, owe a duty of good faith and fair dealing to the persons they insure. If they fail to meet their obligation, they can be adjudged to have acted in “bad faith,” and the aggrieved party may seek to enforce the insurance contract and seek punitive damages in addition to getting the benefit promised by the policy.

“Someone filed a claim against me. Should I expect my insurance rates to go up?”

This is one of the most common concerns following an insurance claim. Unfortunately, the answer is probably yes. Generally, insurance companies do raise insurance rates once a claim is made against you. The increase, however, would depend on how negligent the policy holder was, the number of damages paid on the claim, and your claim history. The law varies according to the state where you live. No-fault states and fault-states may treat premium hikes differently. 

The average price increase for an at-fault accident claim is $600, but it can go higher or lower depending on your location insurance policy, and provider.

“What if someone files a false car accident claim against me?”

While this would lead you to assume that a false claim would not result in an insurance rate increase, this is not always the case. In fact, some insurers impose an increase as soon as any claim is made against you. However, in cases of false claims, the policyholder may prove the falsity of the claim with evidence that you were not involved in an accident at all. This should prompt your insurer to reinstate your current insurance rate, or else it could be grounds to file a bad faith claim against your insurance provider. Under these circumstances, you should contact an insurance claim attorney right away to determine what course of action to take.

If you see that your insurance rate has increased, but you are unaware of any claim, the first thing to enter your mind is, “Did someone file an insurance claim against me without letting me know?”

No, an increase in the cost does not mean a claim was filed against you without your knowledge. As mentioned above, your insurance provider will let you know if a claim is filed. Generally, insurance companies do not omit this step unless, of course, it was you who informed them of the claim.

Car insurance deductible is the amount that the insured has to pay himself when he makes a claim against his own insurance policy. This amount varies for every insured and is always expressed in the policy document. 

Thus, if someone files a claim against you, you will not have to pay the deductible. To emphasize, car insurance deductible will only be paid if it is the insured himself, and not a third party, who files the claim against his own insurance.

A no-claims bonus (NCB) can be affected if someone else claims against your insurance. Generally, you lose your NCB if any claim is made against your insurance. This applies even if the accident was not your fault. Thus, if it is someone else who makes a claim, you would still be subject to losing your no-claims bonus.

Knowing how to fight an insurance claim against you is crucial to protect your rights as an insured party. If you know that the claim is baseless or the facts upon which the insurance claim is based are inaccurate, you have the right to file a dispute and prevent disbursement. 

Insurance companies have different procedures on how to properly challenge a claim. In general, disputing an insurance claim requires:

As discussed earlier, if someone files a claim against you, your insurer is likely to raise the cost of your insurance premium. This is almost always automatic for all insurance companies. 

Thus, disputing a claim will not work to increase your insurance premium.  However, disputing a claim may result in a reduction of the insurance premium if you are able to prove that you were not at fault.

If someone files a claim against you, keep in mind that you should not worry about anything. Instead, you should take proactive steps to know your rights and protect your interest as a party to an insurance claim. Contact an insurance claim lawyer if you have any questions before you act.

Legal help is available for persons in your situation. To help you navigate the insurance claims process, contact an insurance claims lawyer near you today.