What must an insurer do if a claim is made by a third party?

When a claim is made by a third party, the insurance company's obligation is to consider the claim and address it accordingly. This duty stems from the principle of fair claims handling, which requires insurers to investigate and respond to all claims made under the policy. By considering the claim, the insurer can determine the validity of the claim, assess any potential liability, and decide on the appropriate course of action, whether it is to pay, negotiate, or deny the claim based on the policy terms.

This involves gathering information, assessing the circumstances of the claim, and ensuring that the rights of both the claimant and the insured party are respected. Insurers must act in good faith and in accordance with applicable laws and regulations governing claims handling, which reinforces their responsibility to address third-party claims seriously and thoroughly.