Assignment and How the Claim Actually Gets Paid
In most states an injured person cannot sue the other side's insurer directly. Assignment is the mechanism that bridges that gap, and it is why third-party bad-faith cases take the shape they do.
The insured holds the claim
An insurer that unreasonably refused a within-limits settlement has exposed its own policyholder to the excess. The claim for that belongs to the policyholder — not to the person they injured — which is the whole reason assignment exists.
How the arrangement usually works
The insured, facing a judgment they cannot pay, assigns their bad-faith claim against the insurer to the injured party, often alongside an agreement limiting enforcement against the insured personally. The injured party then pursues the insurer in the insured's shoes.
It has to be done carefully
These arrangements are scrutinized, and the details — what was assigned, what was agreed about enforcement, whether the insurer was on notice — affect whether the claim survives. This is not a document to draft informally.
What you can do about it depends on your state
This describes the denial itself, which works much the same everywhere. Whether you can sue under a statute, what you can recover, and how long you have differ sharply — choose the state where your policy was issued.
Common questions
Why can I not just sue their insurer?
Because the duty runs to their policyholder, not to you. Assignment transfers the policyholder’s claim to you so it can be pursued.
The insured wants to assign their claim to me. Is that normal?
It is a recognized route, particularly where an excess judgment exists. It has to be documented carefully, so get advice before agreeing terms.
Is this what happened to you?
A free, confidential review can tell you whether the denial holds up — no cost, no obligation.
Other reasons claims get denied
General information, not legal advice. Insurance law differs by state and every policy is different.