A common situation that is seen in the law office is where someone has a significant injury but the person that causes the injury has a small insurance policy. Clients will sometimes ask why their case is resolving for this small policy amount even though they have an injury.
It is legal in Florida to drive without ANY bodily injury coverage. Consequently, in these difficult economic times, many people are driving without this bodily injury coverage. More common yet are people that drive with the smallest bodily injury limits of $10,000 per person and $20,000 per accident. Further, other drivers have $25,000 per person, $50,000 per person, $100,000 per person, $250,000 per person and even greater limits of bodily injury. Of course, while $250,000 seems like a lot of insurance, if a client is unable to work or has significant medical expenses, even an amount like this can be too small for a particular injury case if someone has catastrophic injuries. Thus, the issue of not having enough insurance can be in smaller injury cases (with smaller policies) or more significant injury cases even with larger policies.
Generally, in a case where the injuries exceed the policy, the insurance company will, upon timely submitted proof and documentation of the injuries, tender their insurance policy. The issue becomes: if this policy is less than what the value of the case is, what should a client do. In this example, I am assuming there is no other insurance to collect against. Obviously, if the client would accept the policy tender and sign a release, they would be releasing the person that caused the accident and thus could not do more. The recourse for the client would be to sue the person who caused the accident (and the owner of the car if different from the driver), and if they were to win a judgment that was greater than the policy, then they could try to collect from the other side.
Another issue that presents itself here is whether the person that you would be suing and attempting to collect against after trial is collectible. There is no way to guarantee whether you will be able to collect a judgment, particularly against an individual but there are some things you could look at. What is the cost of the home where they live and other basic indication of how much wealth, if any, of the person. There are “asset searches” but these, commonly, can only check for things of public record and may not be so accurate. Of course, while someone may be collectible today it does not mean they will be collectible later on if a judgment is obtained for greater than their insurance policy. Further, that person could try to evade collection attempt and so forth.
The point is that there are a lot of considerations when an insurance policy is tendered.
It is important to note that sometimes, if an insurance company does not offer its insurance limits and there has been a judicial finding that it was in “bad faith”, then there is a possibility that the client can seek “extra-contractual” damages, i.e. they can recover their full judgment against the insurance company. This issue is a bit beyond the scope of this blog entry.
