Question from we, What Should I Do If My Insurance Company Refuses to Settle a Lawsuit After a Car Accident in California?
Answer from AI:
Understanding Your Insurance Policy
Firstly, it’s important to understand the terms of your auto insurance policy. In general, auto insurance policies include a duty to defend and a duty to indemnify. The duty to defend obligates the insurer to provide a defense in a lawsuit, while the duty to indemnify requires the insurer to pay any judgment or settlement up to the policy limits. If your insurance company is refusing to settle, it may be because they believe the claim is not covered by your policy or that the claim is not valid.
Communicating with Your Insurance Company
If your insurance company is refusing to settle, it’s crucial to maintain open lines of communication. Ask for a detailed explanation of their decision and review it carefully. If you believe their decision is incorrect, you can present your arguments and any supporting evidence.
Seeking Legal Advice
If your insurance company continues to refuse to settle, it may be time to seek legal advice. An attorney can review your policy, the claim, and the insurance company’s reasons for refusing to settle. They can also advise you on your options, which may include:
- Filing a complaint with the California Department of Insurance
- Filing a lawsuit against your insurance company for breach of contract or bad faith
Understanding the Potential Consequences
If the lawsuit against you proceeds and a judgment is entered for more than your policy limits, you could be personally responsible for the excess. This is known as an “excess judgment.” In California, if an insurer refuses a reasonable settlement offer within policy limits and a judgment is later entered in excess of those limits, the insurer may be liable for the entire judgment, not just the policy limits. This is known as the “duty to settle” or the “implied covenant of good faith and fair dealing.”
It’s important to remember that every situation is unique and the steps outlined above are general guidelines. You should consult with a legal professional for personalized advice. The California State Bar Association provides a legal guide and a lawyer referral service that may be helpful.