Does the Amount of Insurance Affect the Value of My Personal Injury Case?
One of the factors in intelligently valuing a case is an assessment of both the availability and the amount of insurance. Insurance coverage in a typical car accident case involves two different potential types. One is liability insurance. This is third-party insurance that covers the at-fault party, and which pays for damages to the injured party. The other coverage is uninsured or underinsured motorist coverage. Uninsured motorist coverage applies when there is no liability insurance as when the at-fault driver is uninsured or when the at-fault driver has insufficient liability coverage to fully pay for the damages. The latter situation is one involving an underinsured claim. Maryland requires minimum liability limits of $30,000. Maryland law also requires that all drivers purchase uninsured and underinsured motorist coverage and then if the person elects not to purchase such insurance they must designate their choice in writing.
The availability of insurance and the amount of insurance are vitally important in accurately assessing the value of a case.
The availability of lack of insurance does not have any impact on the absolute, or "pure" value of your personal injury case. The value of a case is what is fixed but a jury, or agreed to by the parties through settlement. Certainly a major component of a case evaluation is how much are you likely to get- whether through settlement or a Court proceeding. Available insurance certainly plays a role is a practical evaluation of the case. Any personal injury attorney who has ever had the experience of trying to collect a sizable check from an uninsured person knows that this can be a difficult, daunting, and frustrating process. Yes, there are remedies such as garnishment and execution and levy on assets, but those mechanisms can be costly, time consuming and ultimately ineffective. Having available an in-force insurance policy that creates a source of funds to pay any judgment or settlement is clearly preferable. So much so that
....some lawyers actually decline cases where there is no insurance.
The availability of insurance that will form a source of payment for any recovery-whether liability or uninsured and underinsured- is vital. So is the amount of that insurance coverage. It's no secret many commercial policies have coverage in excess of half a million dollars. Many commercial policies for interstate trucking concerns have policy limits in excess of 2 million dollars. On the other hand, many garden-variety routine auto policies issued in Maryland unfortunately have policy limits of only 30,000.
The amount of insurance coverage plays an important role not only with regards to collectability, but also with respect to settlement negotiations.
For example an adjuster working with a $30,000 policy might be somewhat hesitant to pay $30,000 as that represents a surrender if you will; the insurance company’s worst day in court. That adjuster might be willing to instruct his or her attorney to simply try the case and see what happens. Contrast this situation with a claims adjuster dealing with the two-million-dollar commercial trucking policy. There payment of $30,000 represents 1/60th or less of the value of the policy. Paying only $30,000 might be seen as a victory, as the maximum exposure runs into the millions. The availability an amount of insurance coverage is only one factor, but an important variable, in assessing and valuing a case. I offer a free legal analysis to all my personal injury clients. During this, we discuss the general strategy for prosecuting the claim. It is often not possible to accurately value the claim during this initial meeting, as the information necessary to determine the worth of the claim is not in yet. An accurate, informed case valuation is delivered when litigation decisions are made. Typically, at this point, settlement discussions have culminated, and a choice must be made. Settle the case or move forward with litigation. At this time you should have a complete understanding of the value of your claim to guide you in intelligent, informed litigation/settlement decisions.
-This Article was updated by Eric Kirk on 7/13/20.