Barry P. Goldberg answers the question “Why should I go through my own insurance company when I was not at fault for the accident?” Most clients hit by an uninsured or underinsured motorist are outraged when they learn that they must make a claim with their own insurance company. Many accident victims are concerned that their insurance premiums will rise and they will be charged for being in an accident. It is common for such victims to be concerned that the uninsured driver will get away "Scott Free" and that they should not have to pay for his failure to obtain at least minimum required liability insurance.
While it does not seem “fair” at first blush, there is some logic to the whole “Financial responsibility Law” structure. Most significantly, the law anticipates just these kinds of “uninsured” accidents---that is exactly why you have been paying a separate premium for Uninsured Motorist coverage. In fact, most people do not realize that the Uninsured Motorist Law (Insurance Code §11580) in California pre-dated other laws mandating liability insurance. The way the laws are structured, if you were not at fault for the accident, you will not be charged for an "at-fault" accident merely because you submitted an Uninsured or Underinsured motorist claim.
On the other hand, Uninsured motorists will be punished apart from your accident claim. First, the California Department of Motor Vehicles will suspend the driving privileges for an uninsured driver involved in an automobile accident for at least one year. That is why it is vitally important that all automobile accidents be immediately reported to the California Department of Motor Vehicles. It is a very common misconception that your own insurance company will make such a report on your behalf---they will not! Once the California Department of Motor Vehicles investigates the insurance for all drivers involved in accidents regardless of fault, if they determine that a driver was without liability insurance, that driver's license is automatically suspended for one year. (Even if a non-at fault driver with insurance fails to properly report the accident, his or her license will be suspended for a year!) Reporting the accident is the vital link that permits the Department of Motor Vehicles to enforce the Financial Responsibility laws.
In addition, if your Uninsured Motorist insurer pays you for an at fault driver who was uninsured, it will seek to recover all of the money paid to you directly from the uninsured driver. This is called "subrogation." California insurers have become more aggressive and creative than ever in suing and recovering money from uninsured drivers than ever before. The uninsured driver will likely be held accountable for many times the amount of your Uninsured Motorist coverage premium. That is one of the reasons that Uninsured Motorist coverage is relatively inexpensive for the extensive protection it provides.
Finally, your own insurance company is more likely to honor and cooperate in evaluating your claim. Not only are you a valued customer, but there are statutory and common law obligations that require your insurer to act promptly, fairly and in good faith with you. Why does this matter? It matters because claim presentation more often than not goes smoothly. As an insured, you are often given the benefit of the doubt. There can be severe penalties levied against an insurer that fails to deal in "good faith" with its own insured. As a result, uninsured motorist claims are concluded more promptly and with a better financial result than a comparable "third-party" action.