Can the insurance company refuse to pay for my rental car after an accident?

12 Jun Can the insurance company refuse to pay for my rental car after an accident?

It happens with some frequency, the following scenario: there is a car wreck. Innocent party gets her vehicle in to her mechanic. Innocent party gets a rental car while her vehicle is being fixed.

At-fault person carries insurance! Both people breath a sigh of relief, believing the insurance company will take care of it. After all, this is what insurance is for.

Months pass. Innocent party pays the rental car agency because the insurance is not processing things very quickly and, she had to put her own credit card down in order to even rent the thing. Another month passes. The insurance company finally tells the innocent party that it won’t pay for all her rental car expenses.

Wait, what? Why not? Well…the insurance company’s computer system tells them that: her mechanic was too slow – so it won’t pay for the last 10 days of the rental car; or the rental car place charged more than it should have – so it is discounting what it pays by $14 per day; or, (insert some other hair-brained, unfair excuse). Meanwhile, innocent party already paid every dime to rental car place.

Can the insurance company do that?

Of course not. Such a thing is bad faith. So, too, in specific circumstances, it is against Montana law. That same law also grants attorney’s fees and costs to a party who wins against an insurance company in cases like this.

I like that. The insurance company is probably counting on the fact that the innocent party will get tired of fighting with them and that the amount of money is so relatively small that the innocent party won’t hire a lawyer to recover it. It’s just not cost-effective to pay, for example, $10,000 in attorney’s fees and costs to recover $1,000. Which is why Montana has decided to protect its citizens and discourage this kind of corporate behavior by granting attorney’s fees and costs to innocent parties winning this kind of lawsuit.

There are some things the legislature does that I quibble with. But not this one. This one I heartily support.