On Nov 16, 10:18 am, Stan <stanle...@hotmail.com> wrote:
> YEARS ago, I read about this exact situation, and from the limited
> newspaper coverage I read at the time, the insured was successful in
> his subsequent lawsuit against his insurance company. What was
> mentioned was that one of the allegations in the lawsuit against the
> insurance company was that they based on their decision to go to trial
> on a presumption that the most it would cost them was zero additional
> damages if they lost, and as such, they completely failed to consider
> their insured's interest.
That sounds like you read about a successful insurer-bad-faith claim as discussed in my previous reply post on this thread. The insurer does have an obligation to exercise good faith in trying to protect its insured -- that's what the insured is paying premiums for, after all.
> But on the other hand, and I wouldn't be
> surprised if this were the insurer's justification, by telling the
> injured party what his insurance limit is, Joe isn't exactly
> protecting his insuror's interest,
No, the protection obligation generally runs the other direction. Joe does have certain duties under the policy as a condition of coverage, such as cooperation in the insurer's investigation of the facts, etc. but Joe is not obligated to help the insurer play "hide the pea" if Joe is in fact at fault and willing to admit it. Cooperation with the insurer does not require Joe to lie, or to disagree with or hide his own feelings about what happened, and it is perfectly reasonable for Joe to want his insurer to just pay the claim and make the problem go away, which (as noted above) is the whole reason why he paid his premiums and why insurance is legally considered a valuable form of protection against risk rather than a scam and a crooked racket. The insurer is supposed to honestly assess the risk and honestly evaluate the claim and to pay legitimate claims without making both the claimant, and the poor insured, jump thru agonizing hoop after hoop to get there.
On your other point, I don't believe in any state today there is an explicit _prohibition_ on the insured telling an opposing claimant what his coverage limit is. To the contrary, in many states, there is a requirement to _reveal_ coverage limits at an early pre-suit date when asked. And in virtually every state AFAIK the coverage limits are discoverable and must be disclosed after suit is filed.
The social policy rationale behind this preference for revealing limits is that knowing what the limits are will encourage both parties toward out-of-court settlement -- which the law prefers. OTOH if the coverage amount were kept secret until after trial, the claimants would more often be forced to take a case to trial and get a verdict because they couldn't be sure that an offer was fair -- how could they, if they didn't know how good their chances were of ever collecting on a larger amount than the offer. Although in an appropriate case, with catastrophic damages, known low coverage limits, and a defendant with substantial assets, the claimant's attorney may make the strategic decision that trial is worth the risk rather than accepting a policy limits offer, in the vast majority of cases it is just not worth the risk to the claimant and the claimant instructs his attorney to accept a limits offer.
> and in fact is offering to settle with money that isn't his to begin with.
I beg to differ, if I understand you right. The insurer's money isn't Joe's to play with, but the liability insurer _is_ obligated to put up its money to protect Joe if a claim is made against Joe. That may be a subtle difference, but in most cases the outcome is the same. True, Joe cannot tell the person he just crashed into, "I'll give you $20,000 (or whatever his policy limit is) if you don't sue me" and then expect the insurer to pick up the bill; such an offer would not bind the insurer. Part of the problem is that Joe, unlike professional insurance adjusters and professional plaintiff attorneys, has no idea what the case against him may really be worth. But the insurer, stepping into Joe's shoes, _does_ have a pretty good idea, and also has the duty to Joe to try to settle for an amount within (hopefully under) policy limits, if that can reasonably be done.
> (As an aside, years ago an
> insurance company executive advised that we should never reveal our
> liability coverage;
In what context?
In talking to the other party at the scene of auto crashes? Sure, there's no need to reveal limits at that point; perhaps your speaker just meant to stress that it's a good idea to only provide at the scene the bare information the law requires (name, address, registration, driver's license, name and policy # of insurance company) and leave it at that, to avoid making any potentially damaging admissions. That is not a legal requirement, but a strategic desideratum that this insurance executive is trying to get his insureds to comply with, for their own protection and for his. A subtle difference, yes?
In subcontracting or consulting contracts? It's far more common for a customer to require the contractor, at time of contracting and before the work is done, to provide a certificate of insurance which evidences that the contractor carries insurance in at least a certain stated coverage amount.
Maybe you could clarify what context you meant.
> I wonder if any such prohibition is now buried in
> the fine print of insurance policies?)
I strongly doubt it, given that law favors revealing this information at the appropriate time.
Even in the car-crash example, where the "smart" driver would avoid making harmful admissions to the other party, the insurer cannot disclaim coverage on grounds of lack of cooperation if the insured _does_ make a harmful admission at the scene. Such statements are commonly made, to the chagrin of insurance executives, and are a goldmine for cross-examination at trial.
--
This posting is for discussion purposes, not professional advice.
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Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
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