Insurance Helpline | Insurer not obligated to handle personal injury settlements
QUESTION: A tourist in a hired car came out of a junction and ran into the side of my husband's vehicle. The tourist admitted liability and the police report states it was his fault. My husband submitted all the documents as well as hospital reports concerning his injuries.
The car rental company is disputing the claim. My husband's insurance company is pursuing the claim for damage to the car, which was estimated by their assessor at $150,000. However, they are not dealing with my husband's claim for personal injuries. They have suggested he retain the services of a lawyer. I do not understand this approach since the lawyer will have to be paid. Can you please suggest a course of action?
INSURANCE HELPLINE: I agree with the insurer. Your husband should retain the services of an attorney to handle his personal injury claim. The reasons for this are to be found in your husband's insurance contract. Since you have provided me with no details about it, I will have to make a few assumptions.
Your husband's vehicle is covered under what is commonly called a comprehensive policy. Two parts of that contract are relevant to the questions you posed. One part speaks exclusively to the insurer's contractual duties with respect to damage to the insured vehicle. The other deals with legal liability arising from the use of the vehicle. The Motor Vehicles Insurance (Third-Party Risks) Act, (MVI-TP Risks), which created mandatory motor insurance, describes the risks associated with legal liability as "third-party risks".
By agreeing to fund the $150,000 repair bill, your husband's insurers are simply discharging their contractual duty.
No legal obligation
They do not have any legal duty to negotiate the settlement of your husband's personal injury claim. There is absolutely nothing in his contract that imposes an obligation on them to become involved. This is why they suggested that he retains the services of an attorney.
Section 5(1) of MVI-TP Risks clearly states that a motor policy complies with the law when it provides protection "against any liability incurred by him (the owner or driver) or them in respect of: (i) the death of, or bodily injury to, any person; and (ii) any damage to property, caused by or arising out of the use of the motor vehicle on the road".
There is nothing sinister or underhand about the insurer's advice.
Lawyers should always be involved in the negotiating and settlement of personal injury claims. This is the general advice that I invariably give to persons who write me. There are only two exceptions to this general rule. One would be where the injury was relatively minor. An example would be when an arm or leg was bruised or scraped. Another would be if the other driver's insurer agreed to pay your medical bills and offered a few thousand dollars extra in order to quickly dispose of a claim.
Seek legal advice
There are five reasons why you should consult a lawyer, even for seemingly minor personal injuries:
1. Minor Injuries May Turn into Major Ones. If your injuries turn out to be worse than you and your doctor thought, and you have already accepted a settlement offer, there will be nothing you can do about it since you must give up any and all future claims arising out of the accident when you settle. A good lawyer will advise you to wait until you know the full extent of your injuries, and would help you to determine the right time to accept an offer.
2. You Are Entitled to 'Pain and Suffering' Damages. Pain and suffering and emotional distress damages would be considered if your case went to court, and so a settlement that doesn't include these types of damages might not be a complete one. Your lawyer can explain all damages you may be entitled to, even for injuries that seem minor, and will advocate on your behalf to make sure you receive a satisfactory settlement.
3. Insurers generally hire or retain the services of lawyers and doctors in dealing with personal injury claims. A layman would be at a distinct disadvantage if he sought to settle any such claim without the benefit of his/her legal and medical specialists.
4. Lawyers are experts in negotiation and can maximise your recovery.
5. The insurers may take your claim more seriously when you are represented by an attorney.
Remember, your husband's primary goal should be to obtain a fair and quick compensation for his injuries. The insurer's goal is to realise a profit for its shareholders. To the extent that it can minimise claim payments, shareholders benefit.
Some persons may be reluctant to hire a lawyer out of a fear of paying legal fees. Lawyers work on a contingency fee basis.
This means that the lawyer will not be paid any money or legal fees unless you win your case or settle out of court. Contingency fee agreements work by allowing the lawyer to collect compensation out of your settlement or damage award.
These agreements are structured based on a percentage of the amount of money that you receive. Bear in mind that 80 per cent of $1,000 is better than 100 per cent of nothing.
- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: firstname.lastname@example.org