As a Los Angeles accident lawyer, I stay informed about recent jury verdicts and settlements.
To that end, an issue that may be relatively unclear for laymen is how juries award large verdicts when an insured driver has insurance limits that are much lower than the jury award.
Some background is important. Every auto insurance policy has limits, both minimum and maximum.
In California, every vehicle must be insured for at least $15,000.00 in bodily injury damages.
But anyone who’s been in an accident knows that $15,000 can be exhausted pretty quickly. The low limits of $15,000 have been in place since the early 1970s, and the law is long overdue for some changes, but more on that another time. This is another reason why everyone should carry a healthy amount of uninsured motorist coverage.
Let’s say someone carries higher insurance, such as $100,000. In this scenario, $100,000 represents the total amount that driver is insured for in the event he or she causes injuries to another. Put another way, the insurance company has no obligation to pay more than the $100,000 required under the policy. The upper limits are $100,000.
How, then, do we hear about auto accident cases where juries award hundreds of thousands of dollars, possibly millions? If an insured driver only has limits of $100,000, how do plaintiffs sometimes obtain more?
The answer lies in a procedural tactic known as a policy limits demand.
In order for a plaintiff to obtain more than the policy limits, he or she must demand, in writing, the full amount available under the insured’s policy. There are some other procedural requirements, and a Los Angeles accident attorney should be able to help you understand them.
Upon receiving a policy limits demand, an insurance company must respond in a reasonable amount of time to the demand. If an insurer does not respond to the policy limits demand, or if it makes a decision not to pay the entire policy limits, then the plaintiff has effectively opened the insurance company up to paying more money down the road if and when a jury awards the plaintiff a higher amount.
This is also known as “opening the lid” on the insurance policy. It’s how a recent case out of Florida yielded an injured plaintiff $413,000 when the negligent driver was only insured for $100,000.
Does it make sense that the insurance company refused to pay $100,000, only to pay $413,000 later?
Absolutely not! But then again, insurance company conduct is inexplicable most of the time.
Call the Rabbi Lawyer for questions about your case. He doesn’t put up with insurance company chutzpah!