A Breakdown of How a Real Auto Accident Case Works
The Wreck: A Real Auto Accident Case
Stephanie did not remember the impact of the other car. All she remembered were headlights coming into her lane and then waking up in the hospital. She later learned that the other driver was not paying attention; as the other driver attempted to answer her phone, she veered into Stephanie’s lane and hit her head-on. Stephanie’s car was totaled.
The Injury: Car Accident Medical Treatment
Stephanie’s knees slammed into the dash during the wreck. As a result, she had two surgeries on her left knee to repair the torn tendons and damaged cartilage. Her medical bills for the two surgeries and all the related charges were almost $100,000. Her medical treatment, including surgery, rehab, and doctor visits, caused her to be out of work for nearly a month in total. Stephanie was young (only 28 years old) and worried about the bills and how all this would affect her in the future.
The Offer: Insurance Company Makes a Low-ball Offer
One day, after therapy, Stephanie got a call from a lady with an insurance company for the other driver. She was very nice to Stephanie and told her that they might be able to cover “most of her medical bills.” Stephanie was already concerned about the cost of medical bills, recovery, and missed work. The offer the insurance company made seemed really low and only added to her worry. Not knowing what to do next, Stephanie started looking for a lawyer to help. After talking to family members and friends about which lawyer to choose, she called our office and came in to talk with me about the wreck and her discussion with the insurance company representative.
The Consultation: Meeting With the Lawyer
Unfortunately, much of what Stephanie went through is far too common. Even in clear liability wrecks (where another driver is obviously at fault for the accident) insurance companies often try to low-ball injured people in an effort to get them to accept settlements quickly that are far less than what their case is really worth. I really liked Stephanie and her dad immediately. They were good folks who just wanted the insurance companies to be fair with her, and treat her like she was not just a number in a computer somewhere. After discussing the accident in our initial meeting, I felt confident that, given my years of experience and resources, I could obtain an amount that would fully compensate Stephanie for her injuries.
A Lawyer is Hired and Insurance is Identified
Stephanie became our client, and we immediately went to work on her auto accident case.
Right away we obtained documents needed to prove our case to get the maximum recovery for Stephanie. Such documents included the wreck report, employment information, and her medical records and bills. We also spoke to a witness and got photos of the scene and the vehicles.
We then obtained insurance information. In Stephanie’s case, there were two types of insurance that would apply. The first, liability insurance, applies to wrecks that are your fault. In Stephanie’s case, the other driver was at fault, so the liability insurance was the insurance for the other driver, who was driving her mom’s car on her way to a friend’s house. In this case, the amount of liability insurance was $100,000.
But there was another type of insurance available in this particular case. This insurance, called Underinsured Motorist Coverage (UM), was on Stephanie’s policy with her dad. UM coverage is coverage that is meant to cover your losses when the other party doesn’t have enough liability insurance. The amount of coverage they had purchased was $100,000 of what is called “added-on” UM coverage. This means that the UM is added to the liability coverage. Therefore, in Stephanie’s case, we had $200,000 total in available insurance coverage.
I told Stephanie that these cases often go one of two ways; Either the insurance companies are reasonable and pay something fair to settle the case without a lawsuit, or they make every effort to delay and continue to low-ball us and force us to file a lawsuit.
In her auto accident case, the insurance companies tried the delay and the low-ball tactic. Despite her nearly $100,000 in medical bills, the liability insurance company offered only about $40,000. It looked like we were headed toward filing a lawsuit.
The Nature of Liability Insurance and the Insurance Company’s Obligations
The obvious question in Stephanie’s case is why? Why would the insurance company do such a thing? To understand just how serious this is, we must take a short detour into the basics of liability insurance.
Liability insurance is intended to protect you when you cause harm to someone else because you can be sued for that harm. The insurance company is basically saying – “in return for your premiums, we will protect you and try to reasonably settle claims so that you don’t have to face a lawsuit and financial devastation.”
For example, let’s suppose here we offered to take the $100,000 policy limits that were available, but the insurance company declined to take that offer. Also, let’s further assume that after the insurance company declined we then went to trial where we recovered a $1,000,000 verdict from the at-fault driver. As a result, the insurance company would have to pay us the $100,000 liability limits and their insured would owe us the $900,000 balance. This is an example of how an insurance company can expose its insured to a gigantic financial hardship – by not settling a case at or below the liability policy limits when it has a fair opportunity to do so. Now you can see why the insurance company’s refusal to accept an offer of $100,000 to settle the case would be so serious. It would put its own insured at huge risk.
Getting back to Stephanie’s case, because the liability insurer offered so little, we had no choice but to file a lawsuit. We filed the lawsuit and sent a special kind of demand (also called an offer) for settlement to the insurance companies involved. By this point, the case was being handled by two lawyers against us.
Our demand put the liability insurance company in a spot where it had to make a decision. Would it continue to refuse to pay the liability limits to save itself money? Or would it pay the limits, and settle the case against its insured, thereby protecting its insured from a verdict that could be huge and financially devastating? If it refused to settle and we went to trial and got $500,000, then the insurance company might later be found to have acted in bad faith and have to pay the full $500,000 rather than only the $100,000.
Thankfully, the story has a happy ending after its rough start. The lawyers on the other side of the case were reasonable, and we were able to settle the case for the $200,000 of total available insurance coverage. We did not have to pursue a “bad faith” case against the insurance company.
Deciding when to accept a settlement offer and when to file a lawsuit can sometimes be an easy decision but is often difficult. It depends in part on whether a settlement offer fully compensates a person for their injuries compared to the likelihood of fully recovering the total amount of a jury verdict. Ultimately, it is up to the client to decide if they want to accept a settlement offer. In Stephanie’s case, the $200,000 settlement covered her medical expenses, lost wages, and pain and suffering so it wasn’t in her best interest to risk going to trial where she might be awarded a lesser amount.
Stephanie’s patience paid off and she obtained the full amounts of available insurance – both the liability coverage and the UM coverage.