Created by FindLaw's team of legal writers and editors | Last reviewed August 08, 2017
So you finally took your brand new sports car out for a proper joyride on Monterey's famous 17-Mile Drive along one of California's most pristine stretches of coastline. You're seeing just how well the new car handles as you take in the view, but slip on some gravel and collide into a cypress tree. You're fine, but now the hood is crunched like a soda can; but this is why you have excellent collision coverage. Time to file a claim with your insurer and get your new toy back in showroom condition. But what is the process for doing so, and what can you do if your insurer denies the claim? FindLaw's Insurance Claims section covers the basics of insurance claims, including the process for appealing a denied claim, how to sue an insurer for acting in bad faith, whether you need an attorney to help protect your rights, and more.
Insurance Claim Process: The Basics
The insurance claims process differs slightly from one type of insurance to the next, but the fundamentals are virtually the same. The policyholder suffers a loss (damaged property, injury, illness, death of a loved one, lawsuit, etc), then notifies the insurer about the loss. The insurer then investigates the claim to ensure that it is in fact legitimate and to determine exactly how much it will pay out. If the insurer denies a claim, either because it isn't covered or it is determined not to be legitimate, the policyholder typically has an opportunity to appeal the denial.
Certain claims may be automatic, as is often the case when you fill a prescription or visit your doctor (typically, insured patients will pay a co-pay at the point of service). But for covered incidents such as car accidents or property damage, the insured must take the initiative and file a claim. But while health insurers pay the service providers directly, auto insurers usually cut checks directly to the insured.
Insurance Bad Faith and Other Claims: Overview
Insurers are expected to follow through on their contractual obligations to their clients, as outlined in the insurance agreement. If they choose not to cover something that should be covered, fail to pay the full amount of what a client should be paid, or otherwise renege on their end of the agreement, the insured individual or entity may be able to file a legal claim. Specifically, this would take the form of an insurance bad faith tort claim against the insurer for violating its duty of good faith and fair dealing.
Insured individuals also may pursue breach of contract claims in situations where the insurer specifically violates terms of the contract (there is substantial overlap with bad faith claims). Other causes of action may include violations of fraud statutes, violations of insurance codes, and estoppel (reliance on the words or conduct of an individual, rather than a written agreement) for agent's misrepresentation of coverage.
While some insurance claims are relatively automatic, others require vigilence on the part of the insured individual. In any event, it always pays to understand your rights and obligations as a consumer. Click on a link below to learn more about insurance claims.
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