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Bonisiwe* was involved in a car accident where her insurance deemed the damage too great, and the car was a write-off. Her insurance paid her the value of the car (what she had it insured for) and have decided to take the other driver – who allegedly caused the accident – to court. She wants to know if they win the case, will her insurance pay her some of the money they won or not. Scorpion Legal Protection discusses her case.
The simple answer to the above is no, but in the event that the insurance company decides to go ahead with litigation against the third party, you, the client, must be informed of their intention to do so. This is because when the insurer takes legal action against the third party, they will also try to recover the excess fee you had to pay as their client when you claimed from them, and so they will need to refund you this money if they are successful in their case.
Insurance works on the legal principle of subrogation – a right that allows one party, normally an insurance company, to step in the shoes of another, the insured, and proceed with legal steps against the negligent third party that was responsible for the damages suffered by the insured. Basically what this means is that when you claim from your insurer, you give up the right to claim from the negligent driver yourself.
Once your insurer pays out the value of your car (what you insured it for) to you, their contract with you is officially fulfilled. They will only refund you the excess fee you had to pay (if this fee was included in the damages they claimed from the third party in their court case). Even if they take the other driver to court, win and get more from the court case than they paid out to you, you will not be paid out further money.
You must remember that going to court can be a complicated and costly legal procedure, and the insurer will have attorneys they need to pay, along with other legal fees, when they decide to do this. So just like you won’t get paid out any additional money (over and above the claim they paid to you) if they win the case, you also won’t be liable to pay any of the legal fees if they lose.
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* This is only basic advice and cannot be relied on solely. Names have been changed to protect identity.
Date added: 15 October 2019
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