Coverage Cancelled for Failure to Cooperate

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

Today’s question comes from a caller concerned about the other driver’s possible lack of insurance coverage.

The caller said that the driver who hit her was entirely at fault and gave the police insurance information, but now that other driver’s insurance company claims there is no coverage and asserts that that other driver failed to cooperate with it. The woman wants to know what her rights are.

Unfortunately, this scenario is becoming increasingly common, especially among insurance carriers that fail to adhere to fair claims settlement practices.

Every insurance carrier will have a provision in its auto insurance policy that compels the insured driver to cooperate with the insurance carrier.

But what does the term ‘cooperate’ mean?

Suppose a driver who causes a crash immediately reaches out to his insurance carrier, but reaches a voicemail system. Or worse yet, what if he is compelled to speak with an artificial intelligence agent?

The driver indeed attempted to contact his insurance carrier; however, because the company had barricaded itself behind a technology wall, it interfered with the driver’s ability to report the crash to a human and proceed to cooperate with the company to explain what had happened.

Suppose the driver leaves his phone number and explains in a voicemail message what happened, asking to be called back. Now, suppose the insurance carrier tries to call back, but because the insured driver’s phone is not set up to receive voicemail, the insurance carrier can’t leave a message. Additionally, since the phone is set to block unknown callers, no call actually gets through. What happens if the insurance carrier says that its insured failed to cooperate and cancels the policy?

The short answer is that coverage could be in jeopardy, despite the insured acting reasonably.

We’ve seen this happen many times: an insurance carrier will claim a lack of cooperation when, in fact, the insurance carrier has precipitated the communication problem.

The insurance carrier will claim that it needs to be informed about the crash and investigate, obtaining a recorded statement from its insured. But if an unscrupulous insurance carrier is the one that makes communication difficult, and does so precisely so that it can deny coverage, doesn’t that rise to the level of bad faith?

Some courts have answered yes, while others have responded no.

Frequently, we have found that even in cases where an insurance carrier sends a letter claiming it cannot provide coverage to a defendant driver due to a lack of cooperation, if we proceed with filing a lawsuit against that driver, the insurance companies will change their position. Why?

Because a lawsuit requires the defendant driver to provide the lawsuit papers to the insurance carrier, it presents another avenue of cooperation.

Now the insurance company has the lawsuit papers in its possession. It can’t just claim that a failed game of phone tag permits it to escape liability. Now it has papers in its hand and no court is going to be inclined to excuse it from following its policy requirements to defend its insured.

To the caller, we would advise that she proceed to hire an attorney and file a lawsuit.

To the driver whose insurance carrier is trying to assert a lack of cooperation, we advise reporting the crash in writing, by mail or fax, or via email, if the driver encounters voicemail hell or an artificial intelligence agent when calling in to report the crash.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com – while there, make sure you request a copy of our book “Fighting for Truth.”