Complaint 21 of 36 in “Claim Denied or Delayed”

Consumer Complaint:

I was rear-ended by an insured of American Freedom Insurance Company in May 2008. The insured called the company and notified them of the accident. I called the company and received and submitted the information I needed to complete to file the claim. The insurance company will not settle the claim until they receive a written accident claim form from the insured who seems to be refusing to submit the information now. The insurance company is telling me that there is nothing that they can do and I am not able to have my car fixed even though I followed all of their processes.

Insurance Expert Answer:

You have what is known as a 3rd party claim for insurance providers. American Freedom Insurance Company is known for affordable automobile insurance policies for some drivers. Ultimately, it owes its insured a duty to defend her and pay any claim (up to the policy limit) you collect from her. You are a stranger to that company, and technically it owes you NOTHING. As Illinois is a traditional fault state, you did the right thing filing your claim with the other party’s insurer.

While American Freedom Insurance Co. technically isn’t beholden to you, every insurance company knows that if they don’t settle clear at fault claims against their insureds, some of the claimants will go to a lawyer. The lawyer will recognize that those aches and pains the driver saw the doctor about, or the week the driver couldn’t work or go skiing, etc. actually to add up to what could be a substantial personal injury claim. This will cost them far more to defend and settle than a simple property damage claim. As experienced members of the insurance industry, they also recognize that when lawyers get involved, the claimant is often less likely to take a smaller payout because they have to pay attorney fees. While many personal injury attorneys work on contingency (they only get paid when you get paid), they still demand larger amounts to cover the difference.

Thus American Freedom seeks to contact its insured. Until their insured corroborates the claim, they are usually not going to pay. For all they know, their insured could have been in China at the time of the accident.

Sometimes, if you submit police and other eyewitness reports, they may take that as corroboration. That leaves you with two options.

1. Sue the driver in small claims court, and you can be pretty sue that she will tell her insurance company and then they’ll pay (or negotiate). If she doesn’t tell the company then, the judgment you get against her should be more than enough corroboration. If the damage exceeds the small claims amount, hire a lawyer – a lawyer’s merely sending a \”lawyer’s letter\” to the driver and company almost always will get action.

2. IF you had collision coverage, let your own insurance company handle it. They will pay to fix the damage, less the deductible, and go after the other driver’s company thru an inter-company mechanism. If it’s a rear-ender, they will recover and refund all or most of the deductible to you. Your automobile insurance premiums may still go up depending on your policy.

What’s the likelihood of you having to go to court? If you go through your own collision insurance, you’re handing your right to sue over to your insurance company. They will generally rely on police reports and other documentation. Submitting a police report and other objective evidence may also go a long way to helping you move forward without going to court. Depending on your auto body damage, injuries, and other elements of the claim, court may be unavoidable.