When Your Insurer Asks Whether to Settle or Deny

Attorney Answer

Under nearly every auto policy that decision belongs to your insurer, not to you — and telling them to deny a claim they should settle can leave you personally exposed. Answer the question they asked with facts, not with an instruction.

Start with what your insurer owes you. An insurer has a duty to accept a reasonable settlement within the policy limits, and the California Supreme Court has held that an insurer that unreasonably refuses to do so answers for the consequences beyond the limits it wrote: Comunale v. Traders & General Ins. Co., 50 Cal. 2d 654 (Cal. 1958). That duty runs to you, the insured. It exists precisely because coverage stops at a number, and any judgment above that number is a debt of yours, not the company's. If you push toward denial and the claim turns out to be worth more than your limits, you are the one holding the difference.

Your insurer's view that you were not at fault is its own conclusion. It does not bind the injured person and it does not bind a court. Fault in California is measured against Cal. Civ. Code § 1714(a), which makes everyone responsible for an injury caused to another by a want of ordinary care in the management of their property or person. The absence of a police report changes nothing about that. No report is required to bring or to defend a claim; officers routinely decline to respond to minor collisions, and fault is decided on photographs, damage patterns, medical records, the parties' accounts and any witnesses.

The regulations give the investigation a shape. Under Cal. Code Regs. tit. 10, § 2695.7(d), every insurer must conduct and diligently pursue a thorough, fair and objective investigation, and must not persist in seeking information that is not reasonably required for or material to resolving a claim dispute. Under § 2695.7(b), an insurer has no more than forty calendar days after receiving proof of claim to accept or deny it, in whole or in part, and under § 2695.7(b)(1) an insurer that denies or rejects a third-party claim, or disputes liability or damages, must do so in writing. So there is a real answer available to you: ask what the investigation has actually produced before anyone decides anything.

What you can do

1. Give your insurer every fact you have — where each vehicle was, photographs, anything you kept from that day, the names of anyone who saw it, and any nearby business or doorbell camera you know of.

2. Ask the adjuster, in writing, what the claim consists of, what injuries are alleged, and what the investigation has found. The regulations require a thorough, fair and objective investigation, and you are entitled to know whether one happened.

3. Ask whether the amount being claimed is within your policy limits, and say in writing that you expect the company to protect you from any exposure above them.

4. Do not instruct the company to deny a claim you do not yet have the facts about. Answer their questions and let their determination rest on their own investigation.

5. If the claim is near or above your limits, or the injuries described are serious, speak with a local attorney about your own position. The lawyer an insurer hires defends the claim; you can also have counsel of your own on the exposure question.

Most lawyers offer a brief initial call at no cost, and a few minutes on your specific facts is worth more than any general guidance, including this page.

⏱ Time limits apply. An injured person's deadline to sue in California is set by Cal. Code Civ. Proc. § 335.1, which gives two years for a claim for injury caused by another's wrongful act or neglect. When that period started, whether it has run, and how it interacts with the claim already presented to your insurer all depend on the specific dates in your case, so have a local attorney check them rather than assuming that time is on anyone's side.