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The Law and Your Claim: If you have been harmed or injured by someone, the ability to be compensated is judged by two basic rights. Tort law rights and contract law rights. There are a few others, but by in large, these two bodies of law govern compensation.

Contract law, obviously, covers whether you can sue when someone has broken a contract or promise. Tort law entails your rights to seek legal redress against others outside that of a contract. Tort law covers both intentional acts, like assaults and batteries, and unintentional acts, like negligence. The largest majority of tort cases are brought under negligence.

A typical car wreck case is usually based upon negligence. Suppose, you are driving through a green light when a driver comes through a red light and hits you. Your right to seek redress is under tort law, and more specifically negligence. Volumes have been written to explain negligence, but negligence is usually defined by courts as “failing to use ordinary care.” Thus, in this red light case, you would claim the other driver did not use ordinary care in either failing to apply his breaks or failing to pay attention to the lights.

However, contract also plays a huge part because the insurance policy that might pay your claim is determined by contract law.

What exactly is Insurance? When watching a football game, it is impossible to escape insurance ads. Without legal training, one would probably conclude that an insurance policy is a wonderful thing. Disaster strikes, and a team from the insurance company is there immediately. You will feel no pain, no disruption, and no loss because you had whatever insurance was being sold by that ad. However, reality is still just reality.

Most people dealing with insurance companies get more frustration than relief from anxiety. How many times have you been on a phone to report a claim? How many numbers did you punch before you finally got to leave a message on voice mail?

Insurance is not a business that stops frustration. It’s merely a contract between a buyer (usually the insured) and the seller, the insurance company. A contract is basically an exchange of agreements (For more see our Guide to Contracts). The insurance contract is nothing more than an agreement by the insurance company to pay a limited amount of money if a certain event happens. During that time the buyer agrees to pay premiums.

Most people understand this when it comes to their own insurance, but much confusion comes up when it involves liability insurance. That’s because under a liability insurance policy, it is not the buyer that gets paid, but someone the buyer hurt. But wait! That’s only if the insurance company agrees to pay, and in some instances, if the buyer (the insured) agrees to let them pay.