Suppose you were involved in an accident and it just so happens that you are the one at fault for causing the accident. The person that you hit was banged up pretty good, but it didn’t appear to be anything serious. You call your insurance company and report the claim and they tell you to not worry about anything and they will take care of everything for you. 6 months later and you get served a lawsuit from the attorney of the person you hit. WHAT?
All the sudden your asking yourself how did all this happen? What kind of person would sue me over what appeared to be a small accident? Why isn’t my insurance company taking care of me? What do I do now?
Regardless of the severity of the injury to the person you hit, the thing you need to realize is your insurance company failed to protect you. They were looking out for their best interest and not yours. The only time you will ever get sued is if your insurance company and the injured party failed to reach an agreement through settlement. If they had reached an agreement, you would have been protected from a lawsuit because your insurance company would have made the injured person sign a release of claims protecting you from any further action involving this accident.
If you are ever served a lawsuit, you need to immediately call your insurance company. Find out the reason behind the lawsuit and try and put pressure on your insurance company to settle before the lawsuit goes any further. They may be as little as $500 apart or as much as a few thousand apart from reaching an agreement. The point is, if your insurance company fails to keep your lawsuit out of court, you may end up footing some of the bill out of your own pocket.
If your case goes all the way to trial and the jury awards more than your liability policy limits, you will be stuck paying the difference. This is why you want your insurance company to settle out of court. Juries are unpredictable. Your insurance company may tell you that you have surefire chance of winning, but what if the injured person hits a home run? You will wish your insurance company had done a better job trying to keep it out of court.
One recent Allstate commercial illustrates this point. The ad shows a court room scene where the judge imposes a judgment on a young man (the person at fault) in the amount of $100,000 after the auto accident. The defendant’s attorney turns to the injured person’s attorney to explain that the young man only has $50,000 in insurance. “Well, he has a college fund that can be used to pay the balance,” says the attorney. The concerned parents ask their attorney – “can they do that?” to which the attorney replies that they can.
Every attorney out there would rather settle out of court. Put pressure on your insurance company to increase their offer to settle out of court. Don’t roll the dice on your money by letting your insurance company tell you that you are guaranteed a win. By letting your insurance company try and save themselves a few thousand dollars, you run the risk of exposing yourself to financial liability. It’s not worth it.
