When a person is injured in a car accident caused by the negligence of another driver, the injured party may make a claim against the negligent driver’s insurance for their damages. What often occurs, however, is that the negligent driver’s insurance policy limit is insufficient to cover the damages, or the negligent driver has no insurance at all. In this instance, the injured party may be able to make a claim to their own insurer to cover all or the remaining damages. The feasibility of this depends on individual policies and will not be triggered unless the negligent driver’s insurance policy limits have been collected.
THE ROLE OF ARBITRATION
Regardless of whether the claim is due to an uninsured or underinsured motorist, when the insured injured party and their insurance company are unable to agree on the amount of the claim, California Vehicle Code §11580.2(f) requires that it must be set for arbitration. This is considered to be a condition precedent to the payment of policy benefits, therefore unless there are unusual circumstances, arbitration must occur before the insured-injured party brings suit against the insurer.
Arbitration is required before an injured party can file suit against their own insurance whether it be due to the insurance company’s unwillingness to pay or bad faith offers and negotiations. California law requires that insurance companies act in good faith to come to an agreement with the insured party before the parties go to arbitration. However, if an insurance company fails to act in good faith, following arbitration the injured-insured party can file suit.
POTENTIAL BAD FAITH CLAIMS
The outcome of arbitration often makes it clear whether or not there is a potential bad faith case against the insurance company. When the outcome of arbitration is an award significantly greater than the offers from the insurance company before arbitration, this is very strong evidence that the insurance company made the offer in bad faith. On the other side, however, when the arbitration award is either the same or similar to the amount initially offered by the insurer during pre-arbitration, it makes it significantly more difficult to have a viable bad faith case against the insurance company.
When the bad faith actions of the insurance company require the parties to go to arbitration, and the injured-insured party subsequently sues the insurance company, the insured can seek damages costs associated with their expenses related to the arbitration. This includes any attorney’s fees or costs. The costs of an attorney to represent the insured in arbitration are often one of the main elements of economic damages sought in bad faith actions.
SEEK LEGAL REPRESENTATION
Ultimately, when an insured party is injured by either an underinsured or uninsured motorist, they can seek a claim from their insurance. If they are unable to agree on the amount of loss with the insurance company, it is most likely they will have to go to arbitration in order to pursue compensation. Given the stakes of arbitration, the insured party should always seek legal representation. An attorney will be best able to handle the claim and represent the insured-injured party in arbitration, as well as any subsequent bad faith actions against the insurer.
Contact the attorneys at Silva Injury Law if you were injured in an automobile accident and have not been fairly compensated for your damages.