Third-Party Auto Insurance Claims in California: What You Need to Know

If you were injured in a car accident in California and you’re seeking compensation from the at-fault driver’s auto insurance, the type of claim you’ll be making is a “third-party claim.” Let’s answer some common questions about third-party car insurance claims and how they work. For legal advice specific to your case, please consult for free with our experienced injury attorney.

Defining Third Party: What Is Considered a Third-Party Claim?

A third-party claim is filed by a party other than the policyholder and the insurance company. For example, if you’re filing an injury claim against a negligent driver’s auto insurance, you are the third party in the case, with the driver being the first party and their auto insurer being the second party.

By comparison, a first-party insurance claim is one that is filed by the policyholder himself or herself. An example is if you file a claim with your own health insurance to pay for your accident injuries. In this case, you – the policyholder – are the first party and your health insurance carrier is the second party.

Is Third-Party Auto Insurance Required in California?

Yes, California drivers are required to have third-party auto insurance coverage, also known as liability coverage. There are two types of third-party coverage that are mandatory in California:

• Bodily injury liability insurance – pays for other people’s injuries or wrongful deaths caused by the insured driver
• Property damage liability insurance – pays for other people’s car repairs and other property damage caused by the insured driver.

I Got Injured by an Uninsured Motorist. Can I Claim From My Own Third-Party Insurance Coverage?

No, you cannot claim from your own third-party insurance as this is meant for claimants other than yourself. You do have other options to cover your medical expenses if an uninsured driver injured you. One is to file a first-party claim with your health insurance policy if it covers accident injuries. If you bought the optional Med Pay with your car insurance policy, it can also cover car crash injuries up to a limit.

If you use these options, your insurance provider will likely seek reimbursement from the driver who caused your injuries. We’ll discuss this further in a section below.

Who Pays for a Third-Party Insurance Claim?

The short answer is that the insurer of the at-fault person is responsible for paying the claimant in a third-party claim. However, this doesn’t happen automatically. If you’re the claimant, you’ll have to go through the insurance claims process, where you can expect the insurance company to try to deny or minimize their responsibility.

If a third-party insurer refuses to pay your claim, you have the option to pursue compensation through a lawsuit. However, you cannot sue the insurer because there is no contract between you and them – the insurer’s only duty is towards the driver who is their insured person. You can instead sue that at-fault driver directly. The insurer has the duty to defend that driver in court, so if you win an award from the judge or jury, it’s still the insurer who likely has to pay that award.

What if the insurance company refuses to defend the at-fault driver in the injury lawsuit? The driver may have grounds to sue the insurer for “bad faith insurance,” which we’ll discuss further in the next section.

Is California a Third-Party “Bad Faith” State?

Yes, California recognizes “bad faith” in third-party insurance claims. “Bad faith insurance” is when an insurance provider fails to act honestly or fails to fulfill their duties towards their insured. An insurance company must fulfill these fundamental duties towards every policyholder:

• Duty to properly and promptly investigate claims against the policyholder
• Duty to defend the policyholder against claims
• Duty to indemnify the policyholder – that is, to pay any settlement agreement or court judgment against the policyholder, up to contract limits.

An example of a third-party bad faith case is when an auto insurer unreasonably rejects a third-party claim, then refuses to pay the court award that the insured driver has to pay. The driver is left to pay the third-party claimant out of pocket because their insurer won’t pay on their behalf. This could be grounds for an insurance bad faith lawsuit against the insurance company.

What is Reimbursement in an Insurance Claim?

In California, most insurance companies have the right to get reimbursed if they’ve covered their policyholder’s losses that were caused by another party.

Let’s say, for instance, that you were injured when a negligent driver rear-ended your vehicle. You file a third-party claim against the at-fault driver’s auto insurance. While waiting for that settlement, you get medical treatment using your own health insurance policy. Once you receive your settlement from the at-fault driver’s insurer, you’ll have to pay back your health insurer for covering your medical treatment.

This reimbursement system prevents you from getting double benefits – one from your own insurer and another from the at-fault party’s insurer. It also helps ensure that it’s the at-fault camp who has to shoulder the cost, not yours.

What is Subrogation in an Insurance Claim? How Does It Work?

Subrogation is similar to reimbursement in that your insurance carrier will have to be paid back by the at-fault party’s side. The main difference is that subrogation rights allow your insurer to pursue a third-party claim on your behalf.

Your insurance policy likely contains language that states your insurer’s subrogation rights. When you contact your insurer to cover your expenses, they will ask you if someone else is responsible for your losses. They will then notify you if they intend to assert their subrogation rights.

If subrogation applies, you must not sign a settlement agreement or any other paper releasing the at-fault driver from liability. Your insurer will ‘step in your shoes’ to file a third-party claim on your behalf.

Is There a Time Limit for Filing a Third-Party Auto Insurance Claim in California?

Each insurance company has its own time frame regarding when you can file an injury claim. Some don’t have a specific deadline while others require you to file within 60 days or so.

In addition, California has a two-year statute of limitations for filing a personal injury lawsuit. This means that you have two years from the date of your accident to bring your case to court.

It’s best that you don’t delay consulting a lawyer to get started on your insurance claim. Many injured individuals have unfortunately missed deadlines that are specific to their case, losing their right to get compensated.

Contact a San Diego County Personal Injury Attorney

When it comes to accident injury cases, the Hamparyan Personal Injury Lawyers are rated Number 1 in San Diego. Southern Californians highly trust our firm for our track record of effectiveness, as we have recovered over $100 million for our injured clients over the last 20+ years.

Reach out to Hamparyan if you have concerns about your third-party car insurance claim. Your consultation is free. Call us today at (619) 550-1355.