Imagine you’ve been involved in a car accident. Insurance information gets exchanged and claims get filed, but how do insurance companies determine who pays for what? The simple answer is that it just depends on the circumstances.
Liability Claims
Liability claims arise when someone is held responsible for an injury, damage or loss suffered by another person. These claims can be made against individuals, companies or organizations and can arise in a variety of situations, such as accidents, medical malpractice, product liability, and professional negligence. In this article, we will explore some of the key aspects of liability claims.
- Legal Basis: Liability claims are typically based on the legal principle of negligence, which requires that the defendant owed a duty of care to the plaintiff and breached that duty, resulting in harm or damages. The duty of care can vary depending on the circumstances and the relationship between the parties involved. For example, a doctor has a duty of care to provide medical treatment that meets certain standards, while a property owner has a duty to maintain a safe environment for visitors.
- Damages: Damages refer to the harm suffered by the plaintiff as a result of the defendant’s breach of duty. These damages can be economic, such as medical bills and lost wages, or non-economic, such as pain and suffering. In some cases, punitive damages may also be awarded to punish the defendant for particularly egregious behavior.
- Insurance: Liability claims can be costly for individuals and organizations to defend, so it is common for them to carry liability insurance. Liability insurance provides financial protection in the event of a liability claim and can cover damages, legal fees, and other related costs. The specific coverage and limits of liability insurance policies can vary depending on the type of policy and the individual circumstances.
- Settlements: Many liability claims are settled out of court through negotiations between the parties involved or through mediation. Settlements can be beneficial for both parties, as they can save time and money compared to a trial. However, settlements also require careful consideration of the potential risks and benefits, as well as legal advice to ensure that the terms of the settlement are fair and reasonable.
- Litigation: In some cases, liability claims may proceed to litigation, which involves presenting evidence and arguments in court to determine liability and damages. Litigation can be lengthy, costly, and stressful for all parties involved, and the outcome is never guaranteed. Therefore, it is important to carefully weigh the potential risks and benefits before deciding to pursue litigation.
No-fault States
There are 18 states that require a special policy called no-fault insurance. This usually covers things like medical expenses or even loss of income, regardless of who is at fault. If you live in a state that is not considered a no-fault state, then it is most often the insurance company of the party that is found to be at fault that pays for most everything.
Homeowner’s Insurance
Homeowner’s insurance can be tricky. There are many scenarios that may cause an insurance claim to be filed. Determining if your policy will help cover losses can be hard and working with your personal Insurance Agent is best.
Medical Bills and Disability Claims
Let’s say you hired a roofer to perform repairs at your home. The roofer falls and gets injured. Is this covered under your homeowner’s insurance or is the roofer responsible for his own expenses? In general, homeowner’s insurance will cover the expenses of anyone injured on your property, even contract workers, like the roofer. One of the few times your homeowner’s insurance policy may not cover an insurance claim is if you were negligent or careless. With that said, the roofer should also carry General Liability insurance as well as a Worker’s Compensation policy. These will cover expenses related to any damage the roofer may have done and any injuries they experience while roofing your house. So, when hiring a roofer, or any contractor, always make sure to obtain a copy of their General Liability and Worker’s Compensation policies.
Property Damage
So your neighbor’s tree fell into your yard, causing damage to your garden shed and fence. Who is the responsible party? More often than not, if it’s in your yard, it’s your responsibility. In this case, you would file an insurance claim with your homeowner’s policy, not your neighbor’s. This may be different if the tree had root damage or other conditions that caused it to be a risk and your neighbor was aware of this and chose to do nothing about it.
Subrogation
What happens when it’s not immediately clear who is at fault or what insurance company should pay for what? Insurance companies have a process called subrogation. This allows for you to file a claim with your insurance company so that you can get back to normal – get your vehicle repaired, cover medical expenses, remove a tree, etc. Your insurance company will then request reimbursement from the insurance company of the at-fault party. This is something that happens behind the scenes and is not a process you are typically involved in, other than providing any requested information.
How to Proceed
If you’ve been involved in a car accident, had someone get injured on your property, had a neighbor’s tree fall in your yard, or any of the other numerous circumstances that could cause insurance companies to get involved, the best thing you can do is to contact your Insurance Agent. Your Insurance Agent is knowledgeable and is there to guide you in the right direction.
If you are in the process of obtaining insurance, be sure to contact us for a quote. We can make sure that all of your questions are answered and that you get the insurance that best fits your individual circumstances. We are here to help.
