DEALING WITH THE OTHER DRIVER’S INSURANCE COMPANY IN CAR AND MOTORCYCLE CRASH CASES

I touched upon this a little in an earlier blog entry. The best advice that I can give someone who is contemplating handling a car crash or motorcycle accident claim against the other driver’s insurance company without a lawyer is: WATCH OUT.

People are often surprised by the minimal to nonexistent obligations that are owed to them by someone else’s insurance company. That is because the insurance relationship is essentially contractual. Because you do not have a contract with the other driver’s insurance company, that insurer owes you nothing until you agree to a settlement with it, at which point you do have a contract. But that contract will only require the other driver’s insurance company to pay what you agreed to take to settle, and that is it.

This situation can be summarized with one sobering fact: Some of my clients who get frustrated with the other driver’s insurer file a complaint with the Iowa Insurance Commissioner. The number of times that the Insurance Commissioner has done anything in response to such a complaint? Zero. My clients always get the same response — someone else’s insurance company has no obligations to you.

Here are a few points in response to questions about the other driver’s insurance company that I often get from my car crash clients:

1. The insurance company does not have to offer to pay you any money if it believes in good faith that that is the correct decision.

2. The insurance company can reject some or all of your claimed injuries and medical expenses if it has a good faith basis for doing so.

3. The insurance company will never have to pay any of your attorney fees.

4. There are no set time limits on when an insurance company has to respond to you.

5. The insurance company does not have to, and will almost certainly refuse to, give you any advice concerning your legal rights or the value of your claim.

6. The insurance company can stand by, watch you accept an unfair settlement offer, and say nothing and that settlement agreement will still be enforceable.

7. The insurance company can immediately contact you and try to get you to settle before you retain a lawyer and before you realize what all of your legal rights may be and that settlement agreement will still be enforceable.

8. You can decide after the fact that your settlement agreement was not fair and that you should have consulted an attorney and that settlement agreement will still be enforceable.

9. All settlement agreements include a waiver of future claims arising out of the same crash, so if you settle your case for an insufficient amount and later require additional medical care and miss more time for work, that settlement agreement will still be enforceable and you will not be able to go back to the insurance company and ask for more money.

I mentioned above that some insurance matters are governed by a “good faith” standard. Any bad faith on the part of the other driver’s insurance company would only give a claim to the other driver, not you, unless the other driver legally “assigns” the bad faith claim against the insurance company to you.

The bottom line is that it is a very bad idea, no matter how minor the collision, to enter into a settlement agreement with the other driver’s insurance company without hiring a personal injury or wrongful death attorney to advocate for you and protect all of your interests and legal rights.

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COLLECTING JUDGMENTS FROM DEFENDANTS

The June 25, 2010 Des Moines Register reported that progress has been made in collection of the 5.68 million dollar civil court judgment that was entered against Rodney Heemstra for the wrongful death of Tom Lyons. I thought that this would be a good time to discuss the potential problems associated with collecting court judgments from individual defendants who have no insurance to cover the loss.  This problem can exist in any type if civil lawsuit, including claims regarding business practices and contract law, nuisance law, dog bite claims, motor vehicle accident claims, motorcycle crashes, construction defect claims, or defective product claims.

Judgment collection is generally not an issue for insured defendants. If the defendant has insurance against the loss, any judgment that you get will be paid by the insurance up to the policy limits. And if it is a car crash case, your own car insurance company may also have payment responsibility if the other driver is not insured (uninsured) or lacks sufficient insurance coverage (underinsured). Of course, if you sue a big corporation (say, for example, Microsoft or Toyota), you would hope that, insurance coverage or not, the corporation would have enough assets and money to cover the judgment.

But what about defendants that have no insurance and lack the cash, property, or assets to pay your court judgment? As has been seen from the Heemstra case, collecting on that judgment becomes much more time-consuming and doubtful. Assuming that your defendant does not just cut you a check or hand you a suitcase full of cash, you will find yourself in the same position as the Lyon estate, going through one court hearing after another trying to collect from the defendant. You will have to track down the defendant and all of the defendant’s property (usually at your own expense). You will have to wait in line behind priority creditors like the federal, state, or county government, any mortgage holders, . As demonstrated by Rodney Heemstra, you can also expect that the defendant will not cooperate in your efforts to take the defendant’s money and property.

The moral of the story is that, in cases involving a defendant that is neither insured nor wealthy, consideration must be given to the possibility that collecting on any judgment, or even part of the judgment, may be time-consuming, expensive, difficult, or impossible, or a combination of all four. And even wealthy defendants may not necessarily just stand by while you take everything that they own.

An experienced personal injury/wrongful death attorney will be able to take these issues into account when advising you regarding your case.