Q: My wife was badly hurt in a car accident. Surgery is needed. The other driver has good insurance coverage. The lawyer tells us “a policy limits demand” is sensible. Can you explain the reasoning? –D.H., Canyon Lake
A: Policy limits demand means you are demanding the full amount available for injury coverage from the other party’s auto insurance policy. Policy limits are, at the lower end, $15,000 per person, $30,000 total for all combined claimants; but, limits can be upwards to $50,000, $100,000, $300,000 or $500,000 (perhaps more if it is a company insurance policy). There also may be an umbrella policy; though such is not the norm.
California recently enacted California Code of Civil Procedure Sections 999 and 999.1 which set forth the process by which a policy limits demand is to be made (you can find each on line).
If your wife’s claims are such that the policy limits is a fair settlement — or you can make argument the claims are worth at least as much as the policy limits — it can be a good strategy to make the demand. This is because the insurance carrier is obligated to protect its insured. If the demand is for the policy limits — let’s say there is $100,000 injury coverage, but the insurer refuses to pay — then the claimant (your wife) might obtain more than that amount through trial. If so, the other driver is personally liable for the amount above the insurance policy limits. The insured person therefore is exposed, which may signify the insurance company acted in bad faith (not sufficiently protected the insured). Thus, there is increased pressure on the carrier when a policy limits demand is made to avoid a potential bad faith claim.
Finally, a policy limits demand may make sense if the limits are insufficient, but you have uninsured motorist coverage that is higher than those limits (talk this option out with your counsel).
Q: When there is an auto accident, is the other party required to let us know how much insurance coverage he has? –O.P., Tarzana
A: The other party is not obligated to disclose policy limits. The adjuster for the auto insurance company asks the insured for permission to disclose, and may discuss with the individual why it makes sense to disclose, but there is no legal obligation he or she does so. If you sue in court, then as part of routine written discovery you can ask for the policy limits. The other party is required to provide the information in discovery.
There are companies who, typically for a fee, can seek to find out policy limits for a fee. Your lawyer likely knows of a reputable such company.
Ron Sokol has been a practicing attorney for more than 40 years, and has also served many times as a judge pro tem, mediator, and arbitrator. It is important to keep in mind that this column presents a summary of the law, and is not to be treated or considered legal advice, let alone a substitute for actual consultation with a qualified professional.
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