A third-party insurance claim is a claim you make against another driver's auto insurance coverage. Filing your third-party claim with the insurance company is usually pretty simple, but getting a fair settlement will require some work. In this article, you'll learn:
The term "third-party insurance claim" sounds like fancy lawyer stuff, right? Don't be fooled. Here's what it means.
An insurance company and its customer, the insured driver, are "first parties" to the auto insurance contract. You're an outsider to the contract—or to use our fancy legal term—a "third party." Simply put, a third-party claim is a claim you make against another person's auto insurance policy.
Here's another way of saying it: Any claim you make against an insurance policy other than your own is a third-party claim. Take a look at these examples.
The short answer is: It depends on the state where you live. If you live in a state with a "fault-based" auto insurance system—where legal responsibility for an auto accident depends on who was negligent—you can bring a third-party claim against the insurance policy of a negligent driver who hits you.
But if you live in a "no-fault" state, meaning a state with a no-fault insurance system, the rules for third-party claims are different. Let's find out about bringing third-party insurance claims in a no-fault state.
In a nutshell, a no-fault insurance system is designed to largely remove the issue of negligence from the insurance claim process. When you buy auto insurance in a no-fault state, one coverage that's included with your policy is called "personal injury protection" (PIP) coverage.
If you're involved in an accident and you want compensation for your injuries, you must start by filing a claim with your own auto insurance company under your PIP coverage. Because it's no-fault insurance, you don't have to prove that the other driver was negligent.
PIP coverage takes care of at least a portion of your medical bills, lost wages, and other out-of-pocket expenses. As a rule, though, PIP won't cover injuries like pain and suffering or the cost to repair your auto damage.
No-fault systems do allow third-party claims under some circumstances.
In general, third-party claims for personal injuries are permitted in no-fault states if:
(The threshold amount and the definition of "serious" injuries depend on the state you're in.)
If your personal injury claim meets your state's requirements, you're allowed to bring a third-party claim. But keep in mind that, to succeed with this kind of claim, you'll have to prove the other driver was legally to blame for your injuries.
PIP coverage doesn't pay for property damage. To get your car repaired, you can bring a third-party property damage claim against the at-fault driver. Once again, you'll need to show that the other driver's negligence caused your damage.
"Filing" a third-party insurance claim simply means putting the other driver's insurance company on notice that you're bringing a third-party claim. Generally speaking, it's a straightforward process. We'll walk you through it below.
Before you notify the other driver's insurance company, contact your auto insurance company to let your insurer know that you plan to bring a third-party claim. Your insurer might offer to help you file your claim, or might have some advice or instructions for you to follow when notifying the other insurance company.
Another reason to notify your insurance company first: If your insurance company ends up paying you benefits (or might be on the hook to pay you benefits), your policy might require you to let them know about any third-party claim you bring. Depending on the facts and your state law, the company might have a right under your insurance policy to recover what it paid from any third-party compensation you receive.
As a rule, you want to notify the other driver's insurance company of your third-party claim as soon as possible. Once the insurer knows you're making a claim, it will open a file and assign a claims adjuster to the case. The claims adjuster will be your point of contact throughout the claim settlement process.
The claims adjuster isn't your friend and isn't interested in paying you a fair settlement. You're not obligated to cooperate with the adjuster, to give a written or recorded statement, or to share any other information until you're ready. But putting the insurance company on notice and getting a claims adjuster assigned will let the insurance company begin its investigation and should help make the settlement process more efficient once you're ready to move forward.
In today's online world, the insurance company likely has an online claims portal or a mobile claims application for filing claims. If available, that's a good place to start. Be prepared with this information:
If asked to describe how the accident happened, keep your answer to the bare minimum. Remember that your goal here is to put the insurance company on notice of your third-party insurance claim, not to provide lots of details. Here are a couple of examples:
Don't provide any information about your injuries. If asked, simply say that you or your lawyer will detail your injuries, with supporting medical records, in a demand letter you'll send later.
Finally, the best practice is to follow your online claim notice with a written notice sent the old-fashioned way, by "snail mail." Provide the same information you did in your online notification, and mention that you also provided notice online. If you want proof of mailing—probably a good idea—send it by certified mail and request a return receipt.
Once you've put the other driver's insurance company on notice of your third-party claim, you can turn your attention to these tasks:
Particularly when you have significant injuries, it's a good idea to have an attorney handle these tasks. In fact, if you're going to get a lawyer, it's often best to find one right off the bat, even before getting into the claims process.
It's up to you to prove the elements of your third-party injury claim. Specifically, you have to prove that the other driver was negligent and that, as a result, you suffered injuries for which you're entitled to compensation (called "damages"). Unless you're injured and need medical care, the process of gathering evidence starts at the accident scene.
Sometimes, proving that the other driver was negligent is simple. In a rear-end car wreck, for example, fault often isn't in dispute. In cases like that, the insurance adjuster might not put up any fight over who was to blame.
If you need proof that the other driver was at fault, a copy of the police report can help to back up your version of the facts. Contact witnesses and get written or recorded statements, especially if they show the other driver's negligence. Photographs of the accident scene will also help.
Finally, keep a journal or written notes to record how the accident happened, as well as your injuries, treatment, and recovery. If your case ends up in a lawsuit, the other driver's lawyer likely will get a copy of what you've written, so make sure that your entries are truthful and accurate.
Be sure to report all of your injuries, physical and emotional, to your treating healthcare providers. Your medical records from those providers will be essential to prove the injuries you suffered. The written journal you keep will also help to establish your injuries and the impact they had on your life.
Copies of your medical bills will prove the amount of your medical expenses. A letter from your employer's human resources office will document your lost wages and benefits. Keep receipts for out-of-pocket expenses like medications and assistive devices like crutches.
Finally, make sure you get pictures of the damage to your car. Repair estimates or bills will prove the amount of this loss.
Once you've finished medical treatment and been released from your doctor's care, it's time to prepare and send a settlement demand letter. This letter, in most cases, gets the settlement process started.
The demand letter provides key facts about the accident, your injuries and damages, and why the other driver is legally responsible. It concludes with a demand for payment of a lump sum of money to settle all your claims. (Here's a settlement calculator you can use to think about how much to demand.) You'll attach copies of your medical records and bills, witness statements, and other supporting documents to the letter.
Once it's complete, send the letter to the insurance adjuster who's assigned to your claim.
Settlement is, most often, a negotiation process, one that goes back and forth between you and the adjuster. Be prepared: The adjuster is likely to counteroffer far less than your opening demand. Unless it's a "lowball" or "nuisance" offer—meaning a ridiculously low offer that you can't take seriously—getting a low counteroffer is normal.
You should respond to the adjuster's counteroffer in writing. This back-and-forth process will continue until the case is settled or it's clear that the parties can't reach a settlement.
If your claim is simple, the facts aren't disputed, and your injuries are minor, you might try going it alone. But most claims really aren't all that simple. The parties disagree about key facts, like who's to blame for the wreck. Or there are thorny legal issues or questions about your injuries and damages. If that describes your case, or if there's a good amount at stake due to the significance of your injuries, your interests will best be served by hiring an experienced lawyer.
A good car accident lawyer knows how to present the facts of your case in the best light, and how to take on an adjuster who doesn't want to pay fair value for your injuries. Adjusters and insurance companies know they can't take advantage of an experienced attorney. In most cases, your best chance to get a fair settlement for your third-party car insurance claim will be by hiring a lawyer who knows car accident cases.