What Is A Policy Limit Demand In A Personal Injury Case?
Many victims of medical malpractice, car accidents, or another personal injury must file a claim to obtain compensation to pay for their damages.
A personal injury attorney often recommends writing a demand letter to the insurance company on their behalf in these incidents.
Are you the victim of someone else’s negligence? Do you need to send a demand letter seeking compensation? At Rosenfeld Injury Lawyers, LLC, our personal injury attorneys are legal advocates for injured parties seeking compensation and justice. Call us today at (888) 424-5757 (toll-free phone number) or use the contact form to schedule a free case evaluation.
Accidents can strike at any time and cause you injury, expense, and other harm. These events and the corresponding loss often implicate insurance coverage policy limits offered by an insurance company or multiple insurance companies.
How do you obtain the relief and financial compensation afforded within policy limits?
Well, you need to send a policy demand letter containing clear language as to the accident, injuries, costs, liability, and applicable policy limits that the insurance company holds and a settlement demand or at least initiate settlement negotiations.
The following sections review insurance company law when resolving a civil case that includes:
- Demand letter
- Settlement demands
- Settling a claim
- Reviewing a formal settlement offer from defense counsel
- Compensation for medical bills, future medical costs, and other personal injury damages
- Third-party claims
- Personal injury cases
What are Policy Limits in Insurance Policies?
Policy limits or insurance policy limits are the provisions of insurance policies set by any insurance company. They limit how much compensation or benefits an insurance company will pay in the event of a claim payout.
For example, get into a car accident with someone who has a $1 million policy limit. Insurance companies will only pay that much for your damages (property damage, lost wages, hospital bills, etc.) even if you have losses over and above that amount in a liability claim.
The insurer can limit the payout because every insurance policy is a contract you entered into before the incident. Yet, a court held that they only have legal authority if good faith-bad faith would nullify the case.
Still, a bad faith claim must be asserted according to the laws in California, Texas, Illinois, and most other states.
A bad faith attempt by the insurance company to reject your claim or settlement offer could allow you to collect damages well beyond the policy limit.
You can work with a personal injury lawyer to log a demand letter and try and achieve that excess judgment. However, the ultimate decision for the insurer’s failure will be whether or not your claim was a reasonable settlement offer.
The insurer’s duty is only one of fair dealing. The court explained in many cases that if the insurer failed to accept your offer, the test would be if it was deemed reasonable at the time.
If not, you may file a bad-faith lawsuit with a demand letter in the trial court to seek reimbursement and collect excess damages for the insurer’s conduct.
The Insurer’s Duty to Settle Reasonable Claims Under an Insurance Policy
As noted before, the insurance company must merely make a good faith effort to settle after a reasonable offer has been made and cannot operate in bad faith regarding insurance policy coverage limits.
Suppose there was a bad faith failure after your settlement demand letters were sent. In that case, you may file a lawsuit in court claiming you did not receive permissible consideration on your policy coverage limits demands that the law grants you.
In your policy limits demand letter, you must state that the insurance company did not negotiate in good faith but absconded its duty to settle. You could claim that compliance with the law would have had a substantial likelihood of your success.
The insurer’s failure to settle with you might create potential liability as an ‘ill will insurer.’
The Insurance Company’s Role in Settling a Claim with a Policy Limits Demand or in Bad Faith
The insurance company must accept your personal injury demand letter and apply it to policy coverage limits if you meet the requirements under California law, Texas law, and most other states. However, there are some important exceptions to this rule outlined below.
If you are negotiating a settlement with an insurance company defense attorney and they do not accept your demand letter of policy limits, then repeat it again but in writing. In addition, you may want to involve a personal injury lawyer to make sure that the demand letter is completed correctly and in compliance with all court rules.
If you do not receive an answer from the insurance company again, you can file a civil action in court against them to demand compliance with the law.
A lack of response to your demand letters typically results in a trial at the local state or federal court that will rule on your rights as well as excess liability damages beyond policy limits.
For example, an insurer is liable for failing to recognize a personal injury claim under the Policy of Insurance Act.
However, if the insurer recognizes a claim, they ensure that their company has all legal rights and duties under the insurance contract policy.
When the insurer fails to recognize your demand letter as reasonable, you have a case for bad faith conduct in court against them. Your personal injury lawyer can work with you to demand the excess you are owed above policy limits.
The insurer’s duty is only one of fair dealing. The court explained in many cases that if the insurer failed to accept your offer, then the test will be if it was deemed reasonable at the time.
If not, you may file a bad-faith lawsuit with a policy limits demand letter in the trial court to seek reimbursement and collect excess damages for the insurer’s conduct.
Injury lawyers use a specific legal theory to prove that an insurance company failed to follow accepted standards of practice. When they fail to, it is presumed that the insurance company engaged in misconduct or breached their duty of fair dealing.
The court will grant this remedy if the following elements are present:
- An insurance policy exists between the insured and insurer or reinsurer;
- The insurer/reinsurer engaged in conduct contrary to accepted standards of practice; and
- The action was taken for the benefit of the insurer/reinsurer
If this is proven, you can obtain a remedy under a policy limits demand letter and prove that it would have successfully recovered excess damages above the coverage limits. The extra monetary recovery will be based on comparative negligence and the insurance company’s liability for bad faith conduct.
How an Attorney Can Help You with a Policy Limits Demand Letter of Excess Liability
Suppose you have been injured in a car accident or other dangerous incident and wish to send a demand letter for policy limits from the negligent party’s insurance company. In that case, you should speak with an attorney immediately.
An experienced injury lawyer will help you complete a demand letter compliant with state statute and court rules.
They will advise you on correctly filling out demand letters, what information should be included in the demand letter, and where it should be sent. The advice ensures that you meet the legal requirements in your state and comply with federal rules.
A lawyer can also assist you in filing a complaint against the insurance company should they fail to pay for your damages. However, it is not uncommon for insurance companies to reject a demand letter from an injury lawyer, especially if they have concerns about their policy liability limits in the case.
When this happens, the plaintiff’s lawyer negotiates with the insurance company and presents your demand letter for their consideration. They might agree to pay you the policy limits if you are willing to resolve the dispute quickly without going into litigation.
An attorney can be crucial in obtaining reimbursement above policy limits for your excess damages. However, each state has different laws regarding limits, which complicates the process.
An experienced injury lawyer can guide you through every step from the demand letter level to the end of the process.
Their goal is to ensure that their client receives all the compensation they deserve for their injuries against an insurance company that failed to meet its duty of fair dealing.
Other Avenues to Take When an Insurance Company Fails to Pay an Excess Demand Letter
Suppose the insurance company does not agree to pay your demand letter for policy limits. In that case, you have other options available to you due to their alleged failure to meet accepted standards of practice.
This decision is a form of bad-faith conduct that will allow you to sue for reimbursement along with any excess damages. Should all parties seek a settlement, both sides will likely compromise through an agreement between the parties directly or through mediation.
Should this occur, it is necessary to execute a release in compliance with the state’s laws. In some jurisdictions, it may be permissible to execute a release of claims on behalf of an injured party without their consent if they are under a certain age, usually 18 years old.
An agreement between the parties might not be possible because there is disagreement over policy limits or other terms. Typically, the only recourse is to litigate the matter.
Should you choose to take the case to court, your attorney should specifically notify the insurance company in writing. The letter should state that if they do not agree to pay your demand letter for policy limits or accept arbitration, you will file suit against the insurance company in an appropriate court and seek reimbursement for excess damages.
What a Demand Letter Could Get You
When you send the defendant’s insurance company a demand letter, you can expect that they should pay you for the following expenses:
- Medical Bills and Expenses: You are entitled to reimbursement for all of your medical bills up until the time that they offer you a settlement or judgment in court. The demand includes not only costs for medical treatment but also lost wages from missing work as well as travel expenses to get to doctors’ appointments and therapy sessions;
- Property Damage: If you have property damage or loss from the accident, you should be able to recover your out-of-pocket expenses for repairing or replacing your car, home, clothing, and other valuables destroyed. You will also receive reimbursement for the replacement value of damaged items along with any lost income from rental property and a lost job;
- Pain and Suffering: If you are suffering from emotional distress as a result of the incident, then you can receive compensation for your pain, shock, fright, or sorrow that may have occurred immediately following the accident or developed into PTSD (Post Traumatic Stress Disorder) over time. You can also receive compensation for the physical and mental issues you face due to the accident. The costs can include future medical expenses, earning capacity, impairment, disfigurement, loss of enjoyment in life activities, property damage, and destruction;
- Legal Expenses: You may be eligible to receive reimbursement for your attorney’s fees and expenses. The funds are needed to cover any costs incurred during the process of helping you deal with your lawsuit;
- Punitive Damages: You can recover punitive damages from the party that caused your harm if it was done intentionally or maliciously then acted in a way that was reckless, willful, wanton, intentional, and fraudulent. The recoverable damages are also not limited to the medical costs from before the time of settlement nor property damage as those items may have already been reimbursed;
- Exemplary Damages: If your injuries were caused by a party engaged in an illegal purpose, you could receive standard compensatory damages along with exemplary damages from that individual. The latter type of compensation can include double compensatory damages and reimbursement for attorney fees and expenses.
Every state has different laws that require insurance companies to respond to demand letters and act on insurance claims. Unsurprisingly, insurance companies will often delay their response time to demand letters where the injured party might not hear back once the demand letter is sent.
In many cases, the insurance company will provide a counteroffer before any pieces of evidence are turned over, including medical records and witness statements. Typically, the counteroffer is substantially less than the value of a fair settlement claim.
Forcefully, using an attorney, victims hurt by another’s negligence do not have to continue waiting for the insurance company to respond after taking an excessive amount of time.
Instead, a demand letter sent by a reputable law firm can outline the value of a fair settlement offer based on comparative negligence that outlines the victim’s injuries and why their policyholder is at fault for damages.
Tactics Insurance Companies Use to Deny or Delay Paying Victims Injured by Their Policy Holder
Victims harmed through negligence or intent can seek monetary recovery from the parties at fault for causing their injuries. This recovery can be sought through a lawsuit, arbitration, or by the victim’s insurance companies.
Are you dealing with an insurance claim for your injuries? There are specific tactics that some insurance companies may use in an attempt to delay or deny your damages as they relate to:
- Lack of Evidence: The insurance company might state that they don’t have enough information to decide on whether or not they’ll pay you. The insurance company may want more evidence, such as medical reports from your physician or an estimate of the property damages;
- Overcoming Policy Limitation: Your insurance claim might have limits dependent on the responsible party’s policy. In this case, if you were injured in a car accident where your policy limits are $50,000 for property damage and another party’s policy is only $10,000, then you won’t be able to recover any more than their limit;
- Independent Counsel: The insurance company may demand that you have an attorney that specializes in injury compensation as the lawyer representing them in this case. They may want to appoint their individual instead of your insurance lawyer;
- Estimate: There is a chance that the insurance company will provide you with a lower damage estimate than what is necessary for repairing the property or body damage as they might believe it’s all you need to cover the costs associated with your injuries;
- Misrepresentation: The insurance company might state an amount they will settle for but then misreport it so the client won’t receive it. Their failure to report the correct information may be a misrepresentation;
- Limits: In some cases, property or bodily injury damage may be limited by the responsible party’s policy coverage. You may not receive compensation for any damages beyond their limit;
- Non-Disclosure: Your insurance company might fail to report information that would have been favorable towards your case. That failure can be considered as a breach of public duty while representing the insurer, or else it is non-disclosure;
- Settlement Offer: The insurance company may offer you a settlement but states it’s non-negotiable. Their offer could be counter to the requirements of your policy, or else it may violate regulations from the Department of Insurance;
- Standstill Agreement: The insurance company might demand that you sign an agreement not to take any further legal action against them as part of their resolution for your claim. Their response isn’t a violation of the law but may be part of a breach in an insurance contract;
Warnings: The insurance company might have used threats or intimidation not to pay compensation for your injuries. The law considers this response an unfair business practice and regards it as unethical behavior on their part;
- Withdrawal of Coverage: The insurance company might try to terminate or suspend the coverage they offer to you. They may state it as a failure by your policyholder, but if an investigation shows otherwise, then they are guilty of violating the regulations set forth by the Department of Insurance
The above tactics aren’t exclusive, and there is a possibility that other methods will be used. However, these aren’t all the tactics that an insurance company could use to avoid paying your claim, so you should be careful as ever before accepting a settlement offer from them.
The insurance company might ask for an immediate acceptance of their terms, or else it’s final, which may not even allow you enough time to consult with your lawyer. But, on the other hand, the insurance company might demand that you accept their request so they can close your file and not have to pay any further damages.
However, consider refusing the settlement offer until you receive something more acceptable and have spoken to a personal injury lawyer.
It may be difficult to reject their demand for a quick resolution since they are threatening legal action, which could cause more damage to you if they insist on a trial, but you should stand up to them and fight for your rights. In addition, you must protect yourself from this type of unfair behavior as it may not be the only time an insurance company tries such tricks.
Talk to Our Coverage Dispute Lawyers Today
Were you involved in a car accident, a victim of medical malpractice, or harmed by a defective product? Were you injured through another’s negligence?
At Rosenfeld Injury Lawyers, LLC, our personal injury attorneys represent victims who others have harmed. Let us review your case’s merits and send an insurance policy demand letter on your behalf.
Our legal team accepts all personal injury cases and wrongful death lawsuits through contingency fee agreements. This promise ensures you pay nothing until we resolve your legal matter through a jury trial verdict or negotiated settlement.
All sensitive or confidential information you share with our legal team remains private through an attorney-client relationship. Call us today at (888) 424-5757 (toll-free phone number) or use the contact form to schedule a free consultation.