Insurance Claims: When And From Who You Can Collect

Question: Why bother about legal rules? Answer: Because you cannot collect unless someone is legally responsible for your damages.

Question: Doesn’t liability insurance eliminate the problem of legal responsibility? Answer: Not by a long shot. A liability insurance company only agrees to pay “all sums which the insured becomes legally obligated to pay.”

Legal responsibility. Insurance companies are in business to make money—just as much as the merchant or the manufacturer. The payment of your claim by the liability insurance company will depend on “legal responsibility.”

In the average liability insurance policy (not to be confused with collision or fire and theft insurance), the insurance company agrees to pay “all sums which the insured shall become legally obligated to pay as damages because of bodily injury . . . including death … or because of injury to or destruction of property.”

It is amazing to observe how few educated and intelligent people understand that the person injured in an automobile accident does not collect from the liability insurance company just because there has been an accident.

A person must be legally liable before he (or his insurance company) is required to foot the bill. Hence, it’s important for you to know a little bit about legal liability. 

In ninety-nine out of one hundred cases, you have to prove negligence before you have legal liability.
What is negligence? “Negligence” is a legal term. It’s a pretty broad and elastic term, but you should have some idea of its meaning—whether or not you “go into court.” A person is “negligent” when he fails to use ordinary care. That is one of the clearest short definitions.

Other definitions of negligence include the following:
Want or absence of care.
Failure to exercise care which the circumstances require.
Failure to use that care which an ordinary or reasonably prudent person would have used under the same circumstances.

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