On Nov 5, 9:44 am, henri <he...@nowhere.com> wrote:
> I'm having difficulty figuring out exactly to what extent the parties are harmed
> and the insurance companies enriched [by applying a mandatory setoff where both parties who sue each other are insured].
Which part don't you get? One of the injured parties got nothing, even though he should have won a judgment and the other party's insurance should have paid it. So that party was harmed, and the opponent's insurance company was enriched. And the other party's judgment got reduced by the amount of the first party's judgment, so that party also got harmed and the first party's insurer also was enriched by getting off the hook for part of the amount they should have paid. The reason the court's ruling makes sense is that even though the law requires you to sue (and obtain a judgment against) the party who hit you, it is not the other driver but his insurance company that actually pays the bill. So you've got 2 injured parties, 2 insurers happily collecting premium payments, and zero (or reduced) payout by the insurers if they are allowed to claim a setoff against each other.
Setoffs work fine if it's really the 2 parties suing each other who would have to pay out of their own pockets; the concept of setoff avoids the necessity of a kindergarten-like transaction of "I'll pay you $1, then you pay me back the same $1" which winds up being the same thing as if the 2 parties just call it even and fugeddaboudit. But if it's the insurers who would have to pay, all that happens is the insurers get to keep the money they otherwise would have paid to the OTHER person who was injured by their insured, and that injured person winds up being denied all or part of the recovery he was awarded.
Here's a simplified example:
Dick and Jane collide.
Dick and Jane both have liability insurance, Dick with Allstate and Jane with Nationwide.
The law of the state where the crash happened applies "comparative" negligence, so that Dick and Jane can each successfully sue anyone else whose negligence contributed to causing their injuries, even if the injured plaintiff is also partly at fault for causing his or her own injuries. The law will simply reduce the plaintiff's recovery by the percentage of his own negligence that contributed to his own injury, but will still award him a money judgment against the other negligent parties.
Dick sues Jane for negligently injuring him.
Jane sues Dick for negligently injuring her.
The 2 cases are consolidated for trial (or one party's injury claim is initially brought as a counterclaim in the suit originated by the first party to file, which is practically the same thing).
At trial of Dick's claim, the jury determines that Dick has injuries worth $30,000 to which Jane's negligence was a contributing cause (and thus, for which Jane is liable), but also finds that Dick is 50% at fault for causing the crash and, hence, for causing his own injuries. So, Dick is awarded a judgment against Jane, for her negligence that injured him, in the amount of $15,000 (50% of the value of HIS injury). Jane's insurer, Nationwide, promptly pays $15,000 to Dick.
The same jury also tries Jane's claim, and finds that Jane has injuries worth $20,000, that Dick is liable for negligence that contributed to causing those injuries, and that Jane is also 50% responsible for her own injuries. So, Jane is awarded a judgment against Dick in the amount of $10,000 (50% of the value of HER injury), Dick's insurer, Allstate, promptly pays $10,000 to Jane.
Or, before the insurers have to pay, should the judge throw together the 2 jury verdicts ($15,000 to one, $10,000 to the other) and apply them as a setoff to each other, entering a single judgment in Dick's favor for the difference, i.e. $5,000 against Jane? No, he shouldn't.
Is that result the same as if Dick and Jane had no insurance? No, it isn't. The idea of setoff arose because if Jane simply handed Dick $15,000 and then Dick gave her back $10,000 of that money, that would be the same as Jane handing Dick $5,000 in the first place. That's what a setoff is, avoiding the need for the actual exchange of money where it's a wash or a partial wash. But applying setoff to Dick and Jane's actual case means that Dick gets $10,000 less than he should have, Jane gets nothing where she should have gotten $10,000, and Allstate and Nationwide both get to keep the premiums they charged to Dick and Jane but walk away $10,000 richer each than they would have been if there had been no setoff.
Clear now? .
--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal matter.
For confidential professional advice, consult your own lawyer in a private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300
No comments:
Post a Comment