Beginning with the commercial to the promises in the policy, insurance companies make a lot of promises that they will be there for you when you need them. Trust is implied in all of the advertisements when it comes to marketing their insurance to the public, welcoming in new buyers with open arms and promising easy transparency. Insurance companies ask buyers to pay hundreds of millions of dollars in premiums, and promise that when it comes time to rely on insurance to come through, the insurance company will be there with great service and protection.
Unfortunately, after signing the insurance policy contract and collecting premiums, the tone of some insurance companies changes. Those open arms they used to welcome in new buyers close, and the walls come down. When this happens, it is important to find the right personal injury lawyer who can hold insurance companies accountable for their promises.
Usually, the kinds of promises the insurance company make are defense or indemnity benefits. The insurance company also usually promises to use its resources and expertise in investigating, evaluating and making settlement offers to claims quickly and the right way.
What kind of insurance do I have?
There are many types of property and people who can be insured. Generally, there are two categories they fall under: property-only insurance policies and liability insurance policies. Property-only insurance policies provide indemnity coverage based on specific limits. Liability insurance policies provide indemnity coverage and defense coverage.
What is defense insurance coverage?
Defense insurance coverage provides reimbursement of attorney’s fees and related costs like court costs if the insured person or entity is sued. The defense insurance company basically pays you back for the money you spent in a lawsuit.
In car insurance policies, insurance companies usually promise to:
- to pay first-party claims,
- medical payments,
- “third-party” claims, and
- liability claims when the insured is or is alleged to be at fault.
Is the insurance company responsible for the promises of the insurance agent?
Whether an insurance company can be held responsible for the promises made by its insurance agent depends on what that particular agent’s job title is and whether that particular agent was authorized to make binding agreements.
For example, managing general agents are given the authority to issue policies on behalf of an insurer as long as they followed all of the insurance company’s underwriting rules and guidelines. In many cases, there is a specific contract called an agency agreement between the insurance company and the insurance agent that includes an outline of the terms of the agreement, how much power and authority the agent has within the scope of the agreement and how long the contract between the agent and the insurance company will last. This agreement will be used to compare the actual duties and responsibilities of the insurance agent with what the agent actually did or failed to do.
If an insurance company’s agent makes a promise that goes beyond what the actual printed insurance policy promises, or if the agent does not include the necessary forms or endorsements to the policy, then the insurance company will likely investigate. This investigation will look at what the insurance policy actually covers for the insured policyholder and the injured claimant.
In a case where the insurance agent did have the authority to issue an insurance policy but over-promised that the insurance policy contract will do more than it actually does, the insurance company has a couple options. First, the insurance company may choose to simply honor the promise of the insurance agent. Second, the insurance company simply report the mistake to the insurance agent’s own “errors and omissions” liability insurance carrier that is unrelated to the insurance company and try to seek some kind of recovery for the mistake of the insurance agent.
Sometimes, an insurance company can even be held liable for an agent that just appeared to be given the authority to issue policies and make these kinds of decisions. Depending on the state’s laws that apply and unique facts of the case, the agent himself can be liable.
In Clements v. Ohio State Life Insurance Co., a court of appeals decided that an insurance company can be held responsible for appearing to act within the approved scope of his duties. In addition, the insurance company can also be bound by his misconduct and mistaken representations to others.
In another case in New York, GeneralAccident Insurance Co. v. David C. Smith and Associates, the insurance company was entitled to receive compensation directly from an agent who failed to follow the insurance company’s instructions and cancel insurance binders.
Is the insurance company responsible for the promises in its advertisements?
Almost everyone has seen at least one insurance advertisement, whether it is a commercial on television or radio, or an ad in the newspaper or on the internet. Many insurance companies also market their services through paper brochures and flyers. Sometimes, these advertisements make promises to potential clients. Depending on the promises made, this may be used as evidence in a case against the insurance company so that the insurance company honors its promises.
What promises does the insurance policy make?
Naturally, the promises that an insurance company makes depends on what the policy says. However, each state has its own unique laws and may hold insurance companies to different standards. Some states recognize that some promises are implied.
An implied promise in insurance contracts may include covenant of good faith and fair dealing. This is a legal terms that generally means that an insurance company needs to act fairly when it deals with its own insured policyholder clients and with injured claimants.
In California, the court in Schwartz v. State Farm, said that insurance companies can even be held responsible under the implied promise of good faith and fair dealing before they owed an obligation or needed to raise a defense against an insurance claim. This means that the duty to act in good faith and deal fairly is there before the issue is contested.
In car insurance policies, the insurance company likely promises to protect its insured policyholder and his or her property. If the insured person’s car is damaged or completely totaled after a car accident or truck accident, the insurance company will do what it takes to repair or replace it. If you have to go seek medical attention because of bodily injury, the insurance company is supposed to pay the medical bills. Generally, the insurance company promises to protect its insured driver’s wallet in the event of an accident.
Aside from implied promises, the exact language used in an insurance policy contains the express promises to the policyholder. Consult a skilled attorney in order to fully understand each of the promises in an insurance policy.
Who fulfills the promises of an insurance company?
After an insurance claim is filed, it typically goes to an insurance company employee within the claims department. The claims department functions as a go between the legal department and the underwriting department. Until a lawsuit is actually filed and a judge and jury step in, the claims department makes the decisions about a claim. The claims department decides whether a claim is denied in full, in part and whether it needs to step in and defend the insured policyholder when a lawsuit is filed. The insurance company has a complex internal structure, and to some extent, each section within the insurance company plays a role in the business.
Without specific and clear terms and language in an insurance policy, it is impossible to determine whether the insurance company will cover a particular accident. Then, the insurance company cannot find out and decide what benefits, if any, it can provide to the insured policyholder. Any exclusions, which are contract terms that carve out areas of coverage, have to interpreted narrowly – meaning that they are not supposed to be twisted to exclude coverage for an area that was clearly meant to be included.
Insurance companies know that the average person may not understand the full implication of legal terms and laws that apply to their case. Instead of carrying out their duties to act in good faith and deal fairly with others, they take advantage and find ways to get out of fulfilling their promises.
Hold insurance companies responsible for their promises to treat you with respect, honesty and fairness by hiring a personal injury lawyer that has the knowledge and experience to bring you the results you deserve.
Contact an experienced personal injury lawyer
Without experience in the insurance industry or legal experience, understanding which factors or evidence can help or hurt your case can be difficult to understand.
Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.
The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-524-8139 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.