If you've been involved in a car or truck accident, and have filed a claim with American Family Auto Insurance, you have the right to expect that they will handle your claim fairly and promptly. Should that not be the case, you may have grounds to file a breach of contract lawsuit, as well as secondary lawsuits such as bad faith conduct on the part of the insurance company.
Insurance Company Obligations
Insurance companies in the United States are regulated by laws that vary slightly from state-to-state. In Colorado, for example, insurance companies are required by law to:
- Investigate your claim within a reasonable time
- Communicate with you about the status of your claim with them
- Pay any part of your claim that is undisputed
- Explain why any part of your claim is disputed and/or offer an alternative settlement
Most states have laws regarding breach of contract or bad faith that apply to insurance companies, although the U.S. Congress has left regulation of insurers to states since the 1940's.
First Party vs. Third Party
Insurance companies face two types of claims: first party and third party. First party claims are those which are filed by the claimant directly, such as property damage claims on a house or automobile due to disaster or an accident. In such cases, an insurer has an obligation to both investigate properly and to pay promptly whatever is due. First party claims can also be filed on behalf of a claimant for breach of contract in health insurance or life insurance, if he feels that the insurer has not followed through on the terms of the insurance contract.
Third party claims are when the claimant is filing a claim with someone else's insurance company, for example, someone who is injured in a car accident filing a claim with the other party's insurance company. Insurance companies have at least two duties when it comes to third party claims:
- to defend a lawsuit brought against the insured, even if the suit is not entirely covered by the insurance policy, and
- to pay any judgments against the policyholder, up to the limit of coverage.
An example of this might be a driver who is being sued for an auto accident that resulted in injury to another party. His insurance company would be legally obligated to defend him in court and pay any judgments rendered against him.
Finding Legal Aid
If you have been unfairly treated by American Family Auto Insurance (or any other insurance company) you should see an attorney as soon as possible to determine if you have grounds for legal action in your particular state.
