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

When a claim is made by a third party, the insurer is legally obliged to address the claim. This means that the insurer cannot simply ignore or dismiss the claim as unnecessary; it has responsibilities under the policy and legal frameworks governing insurance. The duty to respond stems from the contractual obligations outlined in the insurance policy, which typically includes coverage for liabilities that arise from third-party claims.

Additionally, if an insurer were to discharge itself from these obligations, it could expose itself to potential legal consequences. This includes failing to act in good faith, which can lead to allegations of bad faith practices against the insurer. Therefore, it is crucial for insurers to review and process third-party claims to ensure compliance with their legal and contractual duties.