Have you ever heard of the “cooperation clause” in your car insurance contract? Most people haven’t, even those who have purchased car insurance for a number of years. The first time many people learn about it is after they have filed a claim, when the company alleges that the policyholder is not cooperating in getting the company the information it needs to decide how to handle the claim.
Although you may not think about it this way, when you buy car insurance, you are entering into a contract with your insurance company. Both parties to the contract agree to do certain things in the contractual relationship.
The policyholder’s primary duty is to pay premiums in full and on time. However, your policy also contains other requirements, such as notifying the company of a claim within a reasonable time and cooperating with the company in claims and lawsuits.
The insurance company also has duties it must uphold where you are concerned. For example, it must adjust (investigate, decide, and pay) claims in a fair and timely manner. It also has a duty to deal with you fairly, and to provide legal defense for you in a lawsuit arising out of an accident.
If your insurance company “reminds” you that you have a duty to cooperate with it, it is time for you to consult with an experienced personal injury lawyer. That’s because this issue is usually raised only when the company is heading toward a dispute with you, its insured. And under certain, very narrow circumstances, the company has the ability to deny your claim entirely if you do not cooperate.
Claim denial is a very extreme tool that can only be used when two things occur. First, the company must provide you with clear notice that it needs your cooperation on a reasonable matter. Second, the company must be “substantially prejudiced” by your failure to cooperate. Here are some situations that California courts have found to be a failure to cooperate in the facts before them:
- the failure to allow the insurance company to see the damaged property it insures;
- the misrepresentation of important facts;
- the refusal to meet with the insurance company’s lawyer to help defend a lawsuit;
- the refusal to give a deposition in a lawsuit arising out of the accident; and
- the refusal to attend a trial over the accident.
You pay the premiums for your car insurance and you expect—and deserve—to be treated fairly and with respect. And yes, you do have a duty to cooperate with your insurer’s reasonable requests for information and cooperation. However, as you might imagine, whether a request is “reasonable” is often debatable.
Make no mistake, an insurance company exists to make money off of its policyholders. Your “friendly” neighborhood agent works for the company, not for you.
What should you do? If you or a loved one were injured in a serious accident, it is in your best interest to consult with independent legal counsel. An experienced personal injury lawyer can help you evaluate the insurance company’s threat of coverage denial and determine how to proceed.
The Alexander Law Group, LLP is a nationally-recognized and award-winning personal injury law firm with offices in San Jose and San Francisco. We are passionate about our clients and our community. We are advocates for our clients and we invite you to read what our clients have to say. If you or someone you know has been injured, contact us at the Alexander Law Group, LLP or call 888.777.1776. All calls are free and confidential.