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Jon Lewis
Jon Lewis
Attorney • (888) 295-7409

You Can’t Sue Your Insurance Company

7 comments

We have been involved in various cases which I think would strike people of the State of Alabama, as well as those in other parts of the country, as VERY ODD. It is a good example of what has happened in our civil justice system.

Most people who are injured in a car wreck come into our office expecting us to sue the at fault driver’s insurance company, and we explain that we can’t. It is you versus the other driver, not their insurance carrier. Not only that, you cannot mention to the jury that the other driver even has insurance. Notwithstanding the fact that liability insurance is mandatory in Alabama, many drive without such coverage (estimates range from 15-25% of drivers are uninsured in Alabama).

What happens if the injuries are horrific or a death occurs and the other driver has low coverage limits? You also file suit against your own insurance carrier for uninsured/underinsured motorist coverage. This is part of the premium you pay (unless you rejected such coverage in writing which is foolish in this State).

So, in some of our cases, horrible injuries, or even death, have occurred, and the other driver had limited insurance coverage ($25,000-$100,000 in coverage). Our clients had paid their premiums and had their own uninsured/underinsured motorist coverage under their policies. In those cases, we filed suit against both the other driver and our own insurance carrier. The other driver’s insurance would offer to settle for the policy limits. This sounds good, right?

Before we can accept the other driver’s policy limits, we have to let our own insurance company know about the offer, and they can either waive their right of subrogation so that we can settle with the other driver and proceed against our own insurance company, or (and this is the odd part), they can pay the at fault driver’s limits and force us to continue to litigate against the at fault driver in order to recover any of our own uninsured/underinsured motorist coverage.

In that latter event, we try the case to a jury against the at fault driver. If the verdict exceeds the settlement amount, our insurance carrier will pay the difference. If the verdict does not exceed the settlement amount, we keep the settlement we obtained.

Example: John Doe is speeding, crosses the center line, and hits our client, Mary Smith, head on, killing her. John Doe has State Farm and offers to settle for the $25,000.00 policy limits. Mary Smith had Allstate uninsured motorist coverage in the amount of $300,000.00, but Allstate doesn’t think a jury will give us $325,000.00 so Allstate pays us the $25,000.00 and we continue to litigate against Mary Smith. Mary Smith has to participate in the trial even though her insurance company, State Farm, settled, and State Farm still has to pay an attorney to defend her. If our verdict is $500,000.00. State Farm pays $25,000.00 to Allstate, and Allstate pays us $300,000.00 (they already paid us $25,000.00). Allstate can now pursue Mary Smith for their $300,000.00. If our verdict is for $10,000.00, we get nothing extra, and State Farm pays Allstate $10,000.00.

Why do they do this even though our dispute is now with our own insurance carrier (to whom we’ve paid premiums)? They do this so we cannot mention insurance to the jury. What would a jury do if they knew that our own insurance company was not paying out on a policy in a death case. They would slam them. Our dispute is now with our own insurance company, and yet, they get to make it look like it is still against the other driver notwithstanding the realities of the situation.

This is further explained in the Lambert and Lowe cases which I can point you to if you like. You should also read "Delay, Deny, Defend". This explains the insurance industry and the money driving forces which have changed over the last thirty-forty years. It is very interesting, and I will send a FREE copy to the first ten (10) comments on this blog.

7 Comments

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  1. Paula says:
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    Wow, seriously? I’d like a copy, please!

  2. Jon Lewis says:
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    Sure thing. E-mail me your address: jon@lewis-attorneys.com.

  3. donnaweir says:
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    Overall, I am happy with my health insurance I found through “Penny Health Insurance” network. It is not perfect, but in today’s world what is? The health insurance plan has worked quite well for me and my family.

  4. Lee says:
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    Interesting article. I guess this makes sense from the point of view that liability and the amount of damages should be blind from the amount of assets the defendant has. But I certainly see where juries would be sympathetic to defendants who appeared unable to pay but actually had significant insurance recoveries available from the plaintiff’s insurance company.

  5. Jon Lewis says:
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    That’s the problem Lee. In Alabama, you cannot recover compensatory damages in a wrongful death claim (only in Alabama). Damages are strictly punitive. So, in a case where a defendant might have significant insurance, or you have significant uninsured motorist coverage, you have to argue to the jury to punish the other driver. If they ran a red light or stop sign, it is VERY hard to argue punishment – it wasn’t intentional. If we were like the 49 other states, we could argue to compensate the family for their loss. It is very screwy, and no one cares until it’s their loved one killed. Then, they can’t understand it.

  6. Diana Prescher says:
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    I learned so much from your blog. Please send me a coyp of the book about insurance companies.

  7. S.B. says:
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    Where can a find laws on 3rd party liability claims in Georgia?

    I would like a copy of that book.