A first party claim is a claim made for policy benefits “on your own policy”.

What is a third party claim?

A third party claim is a claim made for damages against another person who is insured for liability, thus the insurance claim is on “someone else’s policy”.

What are some things a company is not supposed to do when it’s handling a claim?

It is unlawful for an insurance company to:

Deny payment of a claim of benefits when benefits are owed

Deny a claim without thoroughly investigating the basis for its denial

Made deceptive representations to the insured or claimant under a policy

Force a claim to accept an unreasonably small settlement of a claim in order to take advantage of the claimant’s financial circumstances

Accuse the insured or claimant of trying to defraud the insurance company in order to reduce the value of their claim

Violate state imposed claims handling laws or regulations

Sometimes, when you have a claim made against you, the insurance company does not believe that you have coverage under the policy. However, under a reservation of rights, the insurance company agrees to defend you, but the insurance company is not conceding that the insurance policy covers the claim against you. If it is covered, you will not have to reimburse the insurance company for any of the benefits to which you are entitled under the policy. However, if it is not covered, you will be on your own if a judgment is entered against you.

Unfortunately, when a company issues a reservation of rights, it is putting its insured in a legal limbo, by both offering to hire an attorney of its choosing to defend the insured, while at the same time maintaining the legal right to change its mind and sue the insured. Often, the insurer will file suit once it has reserved its rights. So as an insured, you are being defended by a lawyer paid for by your insurance company, and at the same time you are also defending yourself from a lawsuit filed by the insurance company. Sometimes, as a result of these situations, the attorney representing you, who is being paid for by the company, may have a conflict of interest. It is in your best interest to get your own legal team immediately.

In some states, you are required to accept the defense with reservations, and in other states you are not. In states in which you are not required to accept the reservations, you may be able to enter a settlement agreement with the person bringing the claim to protect your financial interests, and assign whatever claims you have against your insurer to the person making the claims against you. These topics can be complex and you should seek the advice of an attorney other than the lawyer who is being paid for by your insurance company.

If an insurance company breaches the policy, which is a legal contract, the policyholder, or claimant, is entitled to the benefit of their bargain. In other words, in a contract claim, the insurer will then be held responsible for paying the benefits it would have paid, had the insurer simply gone forward and paid the claim. In many states, the policy holder can also recover attorney’s fees, costs, consequential damages, and, in some cases, penalties.

An insurer, under a property and casualty policy, which includes liability coverage, has two primary duties when an insured has a claim or suit lodged against them. The first duty is the duty to defend, and the second duty is the duty to indemnify. The duty to defend is much broader than the duty to indemnify. An insurance company must defend if the claim or suit potentially seeks damages within the scope of the insurance coverage. This means that if the petition or complaint alleges facts and/or damages that are within the scope of coverage, or is reasonably capable of being amended to include a covered cause of action, the insurer must provide a defense.

In addition, the insurer’s duty to defend can be triggered not only by facts alleged in the petition or complaint, but also by facts made known or the insured learns from other sources. Most lawsuits allege numerous causes of action and facts. If an insurer is required to defend one cause of action, it must then defend the entire lawsuit. If the insurance company agrees to defend, but reserves the right to contest the coverage, then the insured may be entitled to retain counsel of his or her choice, in addition to the counsel hired by the insurance company. In several states, this counsel will be paid for by the insurer. In some states this right to an additional counsel is not established in the law. However, as long as the insured does not violate the duty to cooperate, the insured is always free to retain counsel of their own choosing to advise them of their legal rights and protect their interests.

You should seek the professional help of a Columbia insurance attorney who focuses their practice on this area, like the experienced attorneys of Gump, Faiella & Bugalski, LLC. However, if you wish to proceed on your own, you might write a thoughtful letter, which sets out the facts and supporting material to the insurance company setting forth your position and asking for the company to reconsider its decision. Make sure you have read and understand all of the terms and conditions of the insurance policy, and understand your legal rights and responsibilities. If this is not successful, you should consult with one of our experienced attorneys.

It is quite common for an insurance company to attempt to settle a claim for the least amount of money that it can. To support your claim, you should document each item of damage that is documentable. For matters that are difficult to value such as pain, we suggest that you get adequate support. Therefore, a letter from a doctor, documentation of prescriptions taken as well as a description of its interference in your daily life is all helpful to support your claim.

Carefully calculate your actual losses and then add a fair amount for any intangible losses. Intangible losses are those loses which are recoverable under the law but are difficult to calculate. Intangible losses, for instance pain, while difficult to value, may be far more valuable than your easily documented losses. After all, no one could say that $100,000 of medical bills to fix your back is compensable, but having pain in your back for the rest of your life which limits your ability to enjoy your life is not worth a substantial amount.

Once you have carefully documented your loss, negotiate with the company fairly. Do not lie, do not exaggerate your claim, nor should you understate it. If you are unable to resolve your loss after appropriately submitting your claim, you should contact an attorney qualified in this area.

You should always do your homework before speaking with an insurance company. Obtain and read the applicable policy under which you are going to make a claim, including the declarations and endorsements. You should pay particular attention to the limits of the policy concerning the type of claim you are making, any applicable deductibles, language defining who is an insured under the policy, exclusions which limit the situations in which coverage will apply, and any amendments to the policy.

Avoid speaking to claims representatives or insurance company investigators until you have had an opportunity to review and understand the insurance policy under which you are making the claim. If you don’t fully understand your rights you need to speak to one of our experienced attorneys.

If you have been injured as a result of someone else’s negligence, and will be making a claim against their insurance policy, then you should contact an attorney and/or your own insurer before speaking with any insurance company representative from the person that injured you.

Always make notes of any conversations with insurance representatives. Your notes should reflect the time, date, name, position and contact information of the person with who you were speaking and some short notes concerning the substance of your communication. Keep these notes.

Confirm in writing all important conversations you have with the insurance company representative. You should ask if there are applicable forms that you must fill out with respect to making a claim under the policy. If there are such claim forms, then you should insure that they are accurately, truthfully and timely filled out.

In your dealings with insurance company representatives be polite and factually accurate. Do not exaggerate your claims, nor diminish your claim. Keep copies of all documents and correspondence provided to you by insurance company.

Do not give a tape recorded statement or an examination under oath without being certain beforehand that you fully understand your legal rights. Despite what an insurance company representative might tell you, you do have the legal right to consult with an attorney prior to giving a tape recorded statement or examination under oath. If you are asked to give a recorded statement or an examination under oath, you should consult with an attorney or you may be in danger of prejudicing your claim.