INYANAL or maybe you are. My daubed in law was in a car accident about a year ago. It was her fault. No injuries, but the other car was totaled. She carried the minimum insurance with only $100k liability. She got a letter in the mail today from State Farm (the other parties insurance) demanding $25k. I didn’t read the letter yet, but I’m assuming they are trying to recoup the amount over the $10k liability she had.
They don’t have the money to pay this, so should she assume that the insurance company will be taking her to court or is this standard send a letter and see if we can get something?
There’s the standard “kamikaze defense”. Basically, “sue me and you won’t even recover lawyer costs”. This only works if she has absolutely nothing to lose. However, if she has any assets - car paid off, house, bank account, savings - then those might be at risk. (This is why a decent amount of insurance is always a good idea.) maybe she should save up for a bankruptcy lawyer.
Same advice anyone with a real-life question gets - Talk to a real lawyer, not the internet.
Ok, to clarify, did she have a $100K policy or a $10K policy?
So it could be that they’re not getting paid by her insurance company so she has to get them to pay. So maybe it’s just about paperwork.
If they got $100K from her insurance company already and they’re after another $25K then they may be reaching the point of diminishing returns and not ready to go all out trying to collect any more, especially if your daughter doesn’t have assets. If she does have a house maybe her homeowners insurance will cover the balance.
Anyway, since no one ever mentions it in threads like this, she should talk to a lawyer.
Her policy covered $10k in liability. Sorry for the confusion. And yes, I have advised her to seek out an attorney, but I’m just trying to get some opinions here as a base of information.
Is this bodily injury or just property damage (or both)? It sounds like State Farm doesn’t have a judgement yet but is preparing to sue; whether it’s worth their while depends on what assets your daughter-in-law has now or could be expected to have over the next decade or so (that being the time they have to collect the judgement, which varies by state). If the accident was her fault the judgement won’t be any great difficulty for them to obtain; $35K for an accident that totalled the vehicle isn’t that much, especially if it was a newer vehicle or there were any kind of medical bills.
One insurance company does not sue another. the insurance company is a third party. So the insurance company will due the driver at fault. If they win the case The 2nd insurance company will pay up to the limit.
Insurance companies do not have to provide their clients with a lawyer. They will provide a client with a lawyer to protect their own interest. But if the insurance company figures it will cost more to defend their interest they can pay off the claim and then they are done.
You need to call your insurance agent and find out if they are going to be any kind of help. And where did the $25,000 figure come from.
With the cost of cars and medical I think even $100,000 is a low amount of insurance.
Even weirder, it’s generally ‘bad form’ for her insurer to write a $10k check to the other guy’s insurance and say, “Meh, go to her for the rest.” In excess cases like this I don’t pay the subrogation claim unless the other insurer agrees to leave my insured alone for the shortfall.
At the very least her company owes her a defense. Should they not do that, your daughter can turn around and file a bad faith suit against her own insurance company for hanging her out to dry. She may already have grounds for that.
But first things first: she should clue her insurance company to the fact she is being approached for the balance of the debt. At best, her company will provide an attorney to defend her in the “what is owed” matter. She may still need to get her own attorney to advise her about options for paying or bankrupting the debt.
This is not my experience, but I don’t know every company’s policy in every state. I will say this is an incredibly poor business model in terms of customer service (hanging people out to dry is no way to keep customers) as well as needlessly exposing the company to bad faith suits from their screwed-over customers.
To what extent is her insurer expected to fight a lost cause?
Let’s pretend I total someone’s $45,000 car and receive a running a red light ticket for the offense, there are half a dozen witnesses. Do I really expect my insurance company to say “take us to court” (where we will obviously lose and may have to pay their court costs too?)
The question here is whether she has assets that may be at risk- equity in her home, or a decent amount of savings. Moral - if you have something to lose, insurance is a good idea.
I’m not clear on how this is good public policy re the various State Insurance Commissions to allow policies like this to be placed. $ 10,000 property liability is not going to cover most “totaled” type accidents. You’re setting up the at fault policy holder for a big hit.
I am a lawyer licensed in Florida. I am not your lawyer, nor your daughter’s lawyer. This is not legal advice.
She needs to notify her own insurer that the third party’s insurer has demanded payment from her as soon as possible. Her insurer is probably not entitled to settle the claim without her approval, even if it has paid out to the limits of its own liability. They will provide her with an attorney, assuming they cannot negotiate a settlement of her liability without involving one.
Florida, where obbn lives. The legislature recently adopted a full no-fault system so drivers are only required to have $10K in bodily coverage and $10K in property damage coverage for third parties.
As far as I am aware, all Florida auto insurance underwriters include a duty to defend in the insurance contract. It’s not required by law, though.
Assuming the policy includes a duty to defend, the insurer is expected to provide counsel to the policyholder. The insurer gets to direct the litigation, but as a general rule the policyholder must assent to a settlement.
Part of the dispute will be over the AMOUNT of the damages, so not just who is liable but for how much. Maybe that car could have been fixed for $10K but they totalled it out instead; maybe the medical claims include preexisting conditions.
Amen. State-minimum coverage is for suckers and people who are judgment-proof and expect to stay that way.