The short answer is yes, in such cases an insurance company “steps into the shoes” of the other driver and engages in an “adversarial process” with you, their own insured, as you attempt to get compensation for your injuries. BUT, there are ground rules.

When you sign up for auto insurance (or most other types of insurance) your insurance provider owes you a duty of “good faith and fair dealings.” This essentially means they have to treat you (somewhat) fairly in their dealings with you. This includes the obligation to refrain from: (1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of his claim. Some additional responsibilities are also laid out in Indiana’s Unfair Claim Practices Act (IC 27-4-1-4.5), this statute gives examples of what an “unfair claim settlement practice:”

  1. Misrepresenting pertinent facts or insurance policy provisions relating to coverage(s) at issue.
  2. Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
  3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.
  4. Refusing to pay claims without conducting a reasonable investigation based upon all available information.
  5. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
  6. Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
  7. Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.
  8. Attempting to settle a claim for less than the amount to which a reasonable individual would have believed the individual was entitled by reference to written or printed advertising material accompanying or made part of an application.
  9. Attempting to settle claims on the basis of an application that was altered without notice to or knowledge or consent of the insured.
  10. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made.
  11. Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
  12. Delaying the investigation or payment of claims by requiring an insured, a claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.
  13. Failing to promptly settle claims, where liability has become reasonably clear, under one (1) portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
  14. Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

Thus, while your insurance company can play hard ball with you, it can’t get out of hand. If they break the rules you can sue them for not dealing with you in good faith under Indiana law. Don’t get too excited though, those cases are VERY hard to make and even harder to win. That being said, Indiana’s bad faith laws are very valuable tools in a personal injury attorney’s tool kit. These laws can also help curb the bad behavior of insurance companies who are naturally incentivized (like any business) to save money.