Legal Question in Insurance Law in California

Dead Beat Car Insurance Company

My friend insured his cars at Diligent Insurance Agency. I think the parent company is American Manufacturers Mutual. Recently, he got into an accident; he collided with another car. He tried to make a claim, but Diligent went bankruptcy, and the parent company wouldn't pay up. So, where can he goes to get help because I don't think he had $50,000+ to pay the other party. (he had car insurance, but his insurer went bankrupt, who is responsible for the collision damage plus personal injury... I am seriously checking up on my insurance to see if it a major player or some fly-by-night company...)


Asked on 10/06/99, 9:45 pm

2 Answers from Attorneys
Steven Murray Steven W. Murray, APC

Re: Dead Beat Car Insurance Company

The bankruptcy of an insurance agency has no effect

whatsoever on the obligation of American Manufacturers'

Mutual to protect your friend (I am assuming it is the insurance company

from which Diligent obtained your friend's policy). Just because the insurer

won't pay doesn't mean that they are right. Your friend

needs to contact a lawyer to advise him of his rights.

If the insurer went bankrupt, if it was an admitted

insurer, there is a backup Guaranty Fund (CIGA) which

will take over as your friend's insurer. If the insurer

is not admitted, then your friend may have a malpractice

claim against his agent. Even if the agent went bankrupt,

his agent may have malpractice insurance. Bankruptcy

does prevent a lawsuit if enforcement of any judgment

is limited to the bankrupt's liability insurance.

There are some questions which I would have to ask your

friend before I could be more specific.

Good luck.

Steven Murray

(818) 501-2277

Read more
Answered on 10/08/99, 4:11 pm
John Hayes The John Hayes Law Offices

Re: Dead Beat Car Insurance Company

Usually when an insurance company goes bankrupt the insurance commission has other larger companies take over the policies so that in cases such as this there is someone to pay the claim. I doubt that any reasonable lawyer would come after your friend. When a person is unisured the people usually ask that their own insurance pay them under their underinsured motorist policy. It is then up to the insurance company whether or not to go after the individual. This will not happen for another six months. If your friend is hurt and needs his car fixed I would contact the California Insurance commission to find out who is handling his insurance companies policies so that his own needs can be taken care of. If you are in need of further assistance please feel free to call me or have your friend call I am sure I can help him expedite matters with the insurance companies. I can be reached at 888-563-8529. Good luck.

John Hayes

Read more
Answered on 10/07/99, 10:53 pm


Related Questions & Answers

More Insurance Law questions and answers in California