If you have been injured in a traffic accident or in any other accident scenario because another person was negligent, in most cases, you should seek legal advice – from a Texas personal injury lawyer – even before you submit an insurance claim.

One of the first steps that you and your personal injury lawyer will take is to determine if you should file an insurance claim based on your own policy with your own insurance company, or if you should file a “third-party” insurance claim against the negligent party’s insurance policy.

How is that determination made? What is the difference between a first-party insurance claim and a third-party insurance claim? Why is an attorney’s help so important after an accident – especially if you are making a third-party claim? Keep reading for the answers you may need.

What Are Third-Party Insurance Claims?

Most drivers in Texas have car insurance and most homeowners have homeowners’ insurance, but many may not understand the difference between first-party and third-party insurance. If a personal injury claim should arise, it’s important to know the difference.

In third-party liability insurance claims, the first party is the policyholder, the second is the insurance company, and the third is the injured victim. Thus, a third-party claim is made by someone who has not purchased a policy from the insurance company that is receiving the claim.

For instance, if you are responsible for a traffic accident that injures a driver or a passenger in another vehicle, that injured driver or passenger is a third party who may file an injury claim against your automobile insurance policy.

How Are Third-Party Injury Claims Handled?

While traffic accidents account for most third-party claims, you may also file a third-party injury claim against a commercial or residential property owner if you are injured due to that property owner’s negligence, for example, in a slip-and-fall incident, a swimming pool accident, or a dog bite injury.

To be precise, the third party files his or her injury claim against the policyholder and not against the policyholder’s insurance company. The insurance company does not have a contract or a fiduciary relationship with the third party, so its contractual duties are owed only to the policyholder.

In Texas, if the insurance company does not handle a third-party injury claim in good faith, the policyholder – and not the third-party injury victim – may have a potential cause of legal action against the insurer.

What Are an Insurance Company’s Obligations?

A third-party claim requires an insurance company to defend the policyholder in cases where a third-party injury victim is attempting to hold a policyholder liable. Under Texas law, an insurer must settle a claim when the policyholder has been deemed at-fault for an injury.

Let’s say that you are a business owner and someone suffers a slip-and-fall injury on your business premises. You may have purchased a liability policy to protect yourself in these types  of situations.

If the injured person sues your business, and if your insurance company will not defend you in this situation, you may have a bad faith insurance claim against the company, and you will need the advice and services of a Texas insurance bad faith attorney.

What is the Stowers Doctrine?

Texas courts have held that third parties do not have standing to pursue insurance bad faith claims. In Texas, most third-party bad faith claims are governed by the “Stowers Doctrine,” which applies when you sustain damages that surpass the policyholder’s policy limits.

The Stowers Doctrine is unique to Texas. Here’s an example: If Driver X causes a car crash that injures Driver Y, Driver Y will file a claim and seek a settlement with Driver X’s auto insurance company.

If Driver X’s auto insurance company refuses to settle the claim, Driver Y may sue Driver X, who may have admitted that the accident was his or her fault and may have asked the insurance company to settle the claim from Driver Y.

How Will Your Claim Be Settled?

If you are the injured third party, your Texas personal injury lawyer will send the insurance company a “Stowers letter” which offers to settle the claim against the policyholder for an amount within the policy limits. The original claim’s value must exceed the limits of the policy.

After receiving a Stowers letter, if the insurance company still won’t settle the claim, a third-party injury victim may ask the court for a turn-over order, where the court orders the policyholder to turn over his or her own bad faith claim against the insurance company to the third party.

Once the policyholder’s rights are turned over to the third party, the third party stands in the policyholder’s legal position. He or she may now bring a lawsuit against the insurance company for the amount of the injury claim as well as for bad faith insurance practices.

What Else Should You Know About Third-Party Insurance Claims?

If you are a third-party injury victim, and if the negligent party’s insurance company is operating in bad faith and refuses to pay your claim, take your case as quickly as possible to a Texas insurance bad faith attorney.

Third-party injury claims are complicated, and a number of deadlines, details, and exceptions may apply. In Texas, the statute of limitations – meaning the legal deadline – for filing a personal injury claim is two years from the date of the injury.

The exceptions to this deadline are extremely narrow, so you must contact an attorney at once. If you wait two years and try to initiate legal action at the last moment, evidence may have deteriorated and witnesses may have disappeared, so your claim will be less likely to prevail.

What Will It Cost to Pursue Justice?

If your injury prevents you from working, you may already face mounting medical costs, but financial worries do not have to stand in the way of injured victims of negligence who are seeking justice.

Our personal injury lawyers in Texas work on a contingent fee basis, so you pay no attorney’s fee upfront and no fee until and unless you are compensated. Your first legal consultation is also offered with no cost or obligation.

Take advantage of this opportunity to receive personalized legal advice and to learn how the law will apply in your own case. If you’ve been injured in Texas because someone else was negligent – or if you are injured that way in the future – pick up the phone and schedule that first legal consultation at once.