I was involved in an accident in which my car was damaged but no-one was hurt. I received a letter from the other driver’s insurance carrier saying that the insurance carrier was not covering the loss. There was a bunch of legal jargon I didn’t understand in the letter. Does this mean my car won’t be fixed?

I would suggest that it is probably too early to tell if your car will get fixed and paid for by insurance. There are a number of issues involved with a letter of disclaimer.

An insurance company will send a letter of disclaimer if it believes that it is not responsible to pay for the loss. The usual reasons that an insurance company will not pay for a loss is (1) the insured did not pay his premium, (2) vehicle was being used without the owner’s permission (such as a stolen vehicle), or (3) the owner of the car or someone who had the owner’s permission to use the vehicle was driving while intoxicated and caused an accident. There are some times in which the insurance company will be liable even if one of those three circumstances occurred.

For example, just because the insured did not pay his premium does not mean automatically that the loss will not be covered. Under New York law, a carrier has to send a notice to the insured that the policy is canceled. The carrier has the responsibility to send the notice of cancellation with certain language and in a certain font size! If the insurance carrier does not follow the exact letter of the law, the policy is in effect.

Second, the insurance company might be liable if the vehicle was being used by another licensed driver living in the same household as the insured. It would all depend upon circumstances in the home of the insured. For example, did the insured leave keys to the vehicle in a common area in the home about which all licensed drivers in the home knew the key’s location? Prior to the accident, did the insured lend his or her car to the same person that was driving at the time of the accident? These factors would be very important to determine the liability of the insurance company.

Third, even though the insurance company may have been given a statement by a witness that their insured was drunk, the insurance company still may not be able to disclaim. If the police were not at the scene of the accident or the alleged drunk driver was never tested with a breathalyzer or blood test, the insurance company may still have to pay on the claim.

In most instances, we advise our clients to put property damage claims through their own insurance company through a “collision endorsement” in their own policy. Even though a person may not want to put a claim through their own insurance company for an accident that was not their fault, your own insurance company has the resources to fight the other insurance company. If you have a $1,000 deductible in your auto insurance policy “collision endorsement,” after the first $1,000, your own insurance company will pay to fix your car. Then your insurance company has a right of subrogation.

A right of subrogation means that your own insurance company will fight with the other insurance company to get back money your insurance company paid to fix your car, as well as your $1,000 deductible.

If you have no “collision endorsement” in your insurance policy, you can take the driver and owner of the vehicle that caused the accident to small claims court. I would also advise you to file a complaint with the insurance department to investigate the validity of the disclaimer.