QuestionQUESTION: Dear Mr. Justin Petty:
Re: Auto Insurance Deductible
My car was hit bay another car when I was backing up. My insurance company Nationwide says I can go ahead to fix it, but I have to pay $500 deductible until it is determined that it was the other driver's fault. He said ha has not been able to contact other side's insurance company. It's been many weeks already. Isn't there any time limit in law that the insurance company has to pay the deductible? They can keep telling me that it was not decided because they cannot contact the other side and keep avoiding paying the deductible. I have not repaired my car because I want to make sure I will get paid for all.
ANSWER: Makoto,
Unfortunately, there is no time limit for the other company. Only your insurance company is regulated by time limits. If the other party is not cooperating, then the other insurance company can just deny payment. You may look up the phrase "reservation of rights", or non-cooperation. It is common, but it is often misunderstood.
Your best option would be to contact the person that hit you directly and ask them to pay for your deductible. If you are able to speak with the other person, then they might decide to call their insurance company and get the matter resolved.
I hope this helps!
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QUESTION: Dear Mr. Justin Petty:
Thanks for your reply. What I do not understand is this: If the other party's insurance company (I and my insurance company Nationwide know their name/phone# and Nationwide's agent says he has called them to no avail) does not respond, then, Nationwide does not have to pay the deductible? It seems strange, because then, Nationwide can use it as an excuse not to pay deductible and it has no incentive to contact and push the other side's insurance company. There must be a time limit on Nationwide side, not on other side, legally.
ANSWER: Nationwide does not have to pay the deductible, period. If the other party doesn't respond then Nationwide (depending on the State) can simply advise you that they are not pursuing the recovery and leave it in your hands. The subrogation department of Nationwide can only do so much.
Remember that auto accidents occur between people and not insurance companies. The negligent party is the person to pursue, not Nationwide or the other person's insurance. The only way the insurance companies will resolve this is if the negligent party cooperates.
Finally, if you tell me the State, I will tell you if there is a time limit on recovering a deductible. For example, in Texas, the rule is 12 months. If your insurance company cannot get your deductible back or take action to recover it within 12 months, then they must at least advise you that they do not intend to attempt and recover it for you, or if they fail to inform you that they are not pursuing it, then after 12 months, they simply have to pay it back to you.
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QUESTION: Dear Mr. Justin Petty:
My state is California.
AnswerI could find nothing that puts a time limit on the insurer for recovering your deductible. The only applicable statute I could find is listed below. It simply says that if your carrier makes a subrogation demand for damages, they must include your deductible as part of the demand.
It looks like you are stuck hoping that Nationwide can get the other carrier to pay your claim back, and if they can, then you will get your deductible back.
Cal. Code of Regs. tit. 10, § 2695.7.
“Every insurer that makes subrogation demand shall include in every demand first-party claimant’s deductible. Every insurer shall share subrogation recoveries on proportionate basis with first-party claimant, unless first-party claimant has otherwise recovered whole deductible amount. No insurer shall deduct legal or other expenses from recovery of deductible unless insurer has retained outside attorney or collection agency to collect that recovery. The deduction may only be for pro rata share of allocated loss adjustment expense.”
