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.
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