Questioni live in CA; was in an accident with another motorist feb. 2010 and we both had the same insurance company (since the accident i am no longer a policy holder with them). the company determined that neither party was "at fault"--50/50 split down the middle--therefore insurance ended up paying half of my damages. i just got a letter today (over a year later) saying that they are reversing their decision and saying i was the at fault party and now they are trying to recover the damages for the other person. is this something they can do and how is this legal?
AnswerHello Leslie,
I can honestly say, in all my years I've never seen this!
Frankly speaking, I can think of only one reason why an insurance company could retract a claim settlement, and that would involve insurance fraud. In all cases of insurance fraud, insurance companies are not obligated to pay for the so-called damages presented.
So for the purposes of discussion, suppose you received a claim settlement and then some time later your insurance company received reliable information that you had been involved in insurance fraud. That information might logically come from law enforcement, or possibly from an investigative unit of another insurance company. Even though the information appears reliable, the company still has an obligation - particularly where the payment was made to their own insured - to independently analyze or verify the information. If it is subsequently verified that you did engage in insurance fraud, you would not be entitled to the settlement, and they could "go after" you to recover it.
Any other attempt by an insurance company to rescind a claim payment is, in my opinion, highly unethical. Insurance adjusters are taught an at early stage the principle of "estopple". In short, when applied to insurance, this means that when an adjuster leads you to believe that you will receive a settlement for your loss, they cannot take it back. The principle is that you have relied on that information, and to rescind that is patently unfair and unretractable.
In your case, not only did you rely on the settlement - you received it!
Secondly, insurance companies are obligated to investigate all claims in a fair and impartial manner. Once the insurance company has concluded their investigation, they must reach a claim decision - either to settle or to deny. In your case, they settled with you. Now we are to assume that their claims investigation was invalid?! If they are incompetent, it is not your responsibility to pay for it!
Since I'm sure you didn't commit insurance fraud, if I were you I would flatly refuse to adhere to their demands. In the event they sue you, you must obtain the services of an attorney. It is possible that your attorney could actually take an action against the insurance company. But that's a legal question, and out of my scope.
If you want more on claims advice, I strongly suggest you visit my website, http://SolutionsForYourInsuranceClaim.com
I have a variety of articles there, many of which could help you to understand why insurance companies cannot do what this one has done to you.
Good luck.
Jane Pytel
http://SolutionsforYourInsuranceClaim.com
