This is a tough question. There is no easy answer here. I generally represent injured people and there are times in my practice where I am the one asking for the affidavit. But I do get calls from people who caused the accident and they are asking me about this situation.
To be clear, an insured has a duty to cooperate with their insurance company. And if your company wants information about whether you have additional insurance coverage or whether you were in the course and scope of your job (which may provide additional insurance or an additional way for the injured person to collect), then you ABSOLUTELY do have an obligation to give that information and to otherwise cooperate with your insurance company. But the scenario described in the question is where the lawyer for the person that you injured is asking your insurance company to have YOU GIVE YOUR FINANCIAL INFORMATION and the idea is that they are going to use that information to decide whether to accept your insurance policy (presuming it was tendered by your insurance company) or to proceed forward with a lawsuit against you.
First of all, legally there is no obligation pre-suit for the tortfeasor (the person that caused the accident) to fill out a financial affidavit of assets and income for the adverse party. In theory, the other side could choose to not settle the case unless you do the affidavit but in my experience that would be relatively rare. In most civil litigation, the plaintiff (here that’s the injured person) is not entitled to asset information UNTIL AFTER THEY HAVE A JUDGMENT AGAINST YOU. That would be after trial and often getting to a trial would be a year or two after the lawsuit is filed. To be clear, after you lose a case, if you do not pay the judgment, then the other side is allowed to request information about your assets so they can collect their judgment but generally not before judgment. But one concern would be that maybe the other side will settle the case with the affidavit and will not settle the case without the affidavit. So again, even though you are NOT REQUIRED to give the affidavit, you certainly MAY WANT TO give the affidavit if it is required to get the case settled.
Each case is different and there is a lot of information needed to determine the best course in each case. This is pretty common question and it’s hard to know for sure whether to fill out the affidavit without a lot of other info but generally I am more included not to recommend that my client not to fill these out unless you’re totally broke or have no net worth. If you are super rich and the injured person has a claim worth much more than your policy, then filling it out would make it more likely that you’d be sued for over and above the policy. Lawyers (and their clients) generally take the policy when it’s offered by the insurance company. Like the saying goes, a bird in the hand is worth two in the bush.
If the person is badly injured and if your affidavit would basically show that you do not have a lot of money or earn a lot of money, for example, then generally filling out the affidavit is more likely a good idea. If on the other hand, the affidavit would show that you were wealthy and thus likely make it more likely that they would choose to sue you for over and above the policy limits and thus it’s less likely a good idea.
Lawyers can run asset searches to determine where someone is financially but the asset searches can only show so much. If the asset search shows that someone is living in a 5 million dollar home that they own and that information is generally available to the lawyers (and the public), then it would suggest this is a relatively wealthy person and likely worth suing. On the other hand, if a person is living in an apartment in an area that’s not so fancy, that would suggest they are not so wealthy and likely not worth suing. Of course, either scenario is not a guaranty of whether they are worth or not worth suing.
And this part gets complicated but even someone living in a 5 million dollar home may not be easily collectible as under Florida law we have homestead laws so you cannot generally collect against a home if that’s their primary (homesteaded) residence. And while someone would generally have high income to afford that house, if they have a minor child, under Florida law you cannot attach or garnish their wages if they are head of household and have minor children. Further, if you have a judgment against someone who is married and their assets are with their spouse and the accounts and properly titled, you cannot attach those assets. And generally, you cannot collect against retirement assets so if someone has money in a 401K or an IRA, you cannot attach those assets to collect a personal injury judgment. Again, this part is a little beyond the scope of this blog entry but gives you an idea that collection is not always so easy, even when someone is seemingly well off.
It is also important to point out that failure to provide an affidavit to the other side could in theory affect something called bad faith. Your insurance company has a duty to try to resolve your case within the policy limits. So by not filing out the financial affidavit, that could impact whether – in the case where the case goes to court and the injured person recovers more than your policy limits – the injured person tries to collect the excess judgment against you and or against your insurance company. They would only be able to collect against your insurance company via a separate lawsuit where your insurer was found in bad faith and therefore required to pay extracontractual damages. Bad faith is a particularly complicated area of the law and this blog is just giving a very simple description of it.
Thus, while saying “no” to doing the financial affidavit is easy it could come with negative ramifications, like it could result in the injured person not settling and thus you being sued for money over and above your available insurance.
So that gives some information about whether you should fill out the affidavit that the injured person’s lawyer is requesting you to fill out. In summary, there is no easy answer. It depends on the amount of insurance that you have on the policy, plus the extent of the injuries and plus your own financial situation. Also, please note that the decision to do the affidavit is not an easy decision and one would need to know all of the facts – the extent of the injuries, the amount of insurance, the financial situation of the tortfeasor, etc. – in order to advise whether one should or should not do the financial affidavit.
This blog is meant to give a general overview and not to give specific advice towards your particular scenario.
