Albany Injury Lawyers

Settling a million dollar injury for $25,000

This is one of the classic problems faced by personal injury lawyers.

My client was on a motorcycle. An SUV came across the centerline, hit my client, and drove him into another SUV. He was badly injured. The worst injury was losing his leg below the knee. He was in the hospital for almost two months. This is a million dollar injury.

But a million dollar injury is not necessarily a million dollar case. The SUV that hit him was 17 years old (the vehicle, not the driver). This suggested what turned out to be reality. The driver only has a $25,000 insurance policy. I investigated further and, as expected, he has no assets worth mentioning (other than a wrecked 17-year-old SUV).

I tried to set up a bad faith claim (as discussed in a previous post). I sent a letter demanding the $25K within 30 days or else. I spoke with the claim rep about the case. Then I hoped, beyond hope, that the insurance company would be stupid enough not to offer the $25K within 30 days. If they failed to do so, that would give me a shot at a bad faith claim.

Two days after I mailed the letter, the claim rep called and offered the $25K. They weren't that dumb. If you think about the numbers, a jury would only have to find their driver 3% at fault for the verdict to exceed the $25,000 policy (3% of a million dollars is $30,000).

So I'm settling a million dollar case for $25,000. It's not over. We may have a case against the other SUV, but he's only got a $50K policy.

The other side of this coin is that we often get calls on cases where there's a million dollar policy, but the case has no value. I hear stories about cases where there are million dollar injuries and million dollar policies. But I don't believe in myths. :-)

And of course, there is still hope for this case. The rep said something about me having to send her copies of the hospital records. I told her that was her responsibility to get them. So maybe the offer wasn't really made, and we'll still have a bad faith claim. ??

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Bad faith: Insurance issues

One of the problems a personal injury attorney confronts is when you have a great case and the insurance company won't settle or drags its feet. I have a case like that right now. My client was a passenger. The driver of her vehicle was largely at fault for the accident (she had a stop sign). My client just had her second shoulder surgery. That makes the case worth well over the policy limits. Yet still the insurance company drags its feet.

I'm fortunate that I have enough experience working for an insurance company that I know what to do (or at least I think I do). It's called making a bad faith record.

You send the insurance company a letter setting a deadline - say 60 days. If they fail to offer the full policy limits within the deadline, you indicate you will no longer be willing to settle for the policy. And you ask them to let you know if they need more time to investigate, as long as they tell you what they need to investigate.

As the deadline approaches you send them one last letter warning that the deadline is about to expire, and you offer to give more time for investigation if they tell you why they need it.

If they fail to settle within the policy limits within the time limit, without having some reasonable need to investigate something, then they have acted with bad faith toward their insured. They have a duty to negotiate in good faith with the claimant. Failing to do so breaches their duty to their insured, theoretically leaving their insured to pay the amount of the verdict above the policy limits.

After the case goes to trial, if you get a verdict in excess of the policy limits (an "excess verdict"), you then make a deal with their insured -- you waive any claim against the insured personally and the insured assigns you their claim against the insurance company. Then you have a second trial to hold the insurance company accountable for its bad faith, for the excess amount of the verdict (the amount beyond the coverage which the insured would have to pay).

In the case I described above, investigation on liability would be phony. The company likely marked the case as 75-100% the fault of their insured from the beginning. Investigation on the injury would also be phony. The surgeries were clearly caused by the accident.

I spoke with the insurance rep a couple weeks ago (just before the 2nd surgery) and he tried to talk tough with me. That makes me suspect he doesn't know what he's doing. For some reason there's a lot of people like that in the business. On the other hand, some may assume personal injury lawyers don't know what they're doing (and in some cases they may be right).

If I'm correct and the insurance claim rep doesn't really know what he's doing, we may well be setting this up for a good bad faith claim. So my $100K case may turn into a $250K case, or better. If they're bad enough, there's even some potential for a punitive damages claim, though I think that's pretty darn rare.

For some other general blog posts on bad faith, though not on the same bad faith issue, see:
Declarations and Exclusions and
Legal Memo-Random

Blawg of the Day for my other blog

My other blog, the Albany Lawyer Blog, was just named Blawg of the Day by the Inter-Alia blog. A blawg is a law-related blog.

Not related to personal injury, but this is an example of a great post on Lawrence Taylor's DWI attorney's great blog.