As if the shock and pain of a car accident is not difficult enough, the inevitable financial stress resulting from medical expenses, property damage, and lost time at work makes the situation substantially worse. When another driver is at fault for your injuries, you should be able to count on an insurance company to provide coverage that will allow you to recover fully. However, insurance companies often give false promises of coverage, acting in act in bad faith so they can maximize their profit while providing as little coverage as legally possible. Many times, these companies will covertly employ underhanded tactics so a policyholder does not know when they are being taken advantage of. Bad faith practices by deceptive insurance companies include:
- Failing to attend to a claim in a timely manner
- Failing to pay a claim that it owes
- Requiring unnecessary paperwork or unreasonable information to process your claim
- Denying a claim without reasonable explanation
- Lack of communication with policy holder
- Being deceptive about the scope of coverage
All U.S. states require drivers to have the capability of compensating anyone they might injure in a motor vehicle accident due to their fault. This financial responsibility may be shown by:
- Carrying auto liability insurance, which is the requirement in 48 states;
- Paying the state’s Department of Motor Vehicles (DMV) the required uninsured motor vehicle fee if they decide to register their vehicle as uninsured (paying this fee in lieu of purchasing an automobile liability insurance policy, obtaining a self-insurance certification, depositing money or securities, or securing a surety bond is a practice allowed in the state of Virginia; in the event of an accident, the at-fault driver would be held personally liable in compensating the person that he/she has injured); or,
- Depositing securities or money with the state treasurer or filing an SR-22 (these are alternatives to purchasing an auto insurance policy, a practice allowed in the state of New Hampshire).
The purpose of financial responsibility, or liability coverage, is for at-fault drivers to be able to compensate an accident victim for the bodily injuries that he/she has been made to suffer and for all other costs or losses resulting from his/her injuries.
Carrying auto liability insurance is required in all states except in New Hampshire. The type of insurance coverage that drivers need to carry depends on the “liability” system recognized in the state where they reside. In states where the “fault” system is recognized (also called “at-fault” or “tort liability” system), the tort insurance coverage is what drivers will need to purchase.
Under the “fault” system, accident victims can claim compensation from the at-fault driver’s insurance company; the victim may also decide to file a civil lawsuit against the at-fault driver. Compensation that a victim is legally entitled to receive should cover cost of medical treatment, loss of income, pain and suffering, and damage to property.
In “no-fault” states, accident victims can recover financial losses from their own insurance providers, regardless of whose fault the accident is. Two major advantages this system has over the “fault” system is that, one, the victim will no longer have to file a lawsuit just to seek compensation (from the at-fault driver) and, two, seeking compensation will no longer be a problem for: victims of hit-and-run; those whose are hit by a driver in a stolen vehicle; or those who are hit by a driver who is either uninsured or underinsured.