Step One In Any Personal Injury Case, Securing The Defendant’s Insurance Policy Limits

New attorney’s just beginning to practice personal injury law, must have a basic understanding of their state’s law on insurance claims handling, especially as it relates to the discovery of the defendant’s insurance policy limits.  The rules that insurance companies must follow vary from state to state.  Here are the rules insurance companies in California must follow.

1. Triggering Insurance Coverage:

To trigger insurance coverage you must allege facts and claims that are potentially covered by the defendant’s liability policy.  Allegations of an insured’s negligence causing injury is the most common type of allegation that should trigger coverage.  Intentional torts or willful acts are generally excluded claims under most insurance policies.  See California Insurance code section 533.  Also see, Jacobs v. Fire Ins. Exch. (1995) 36 Cal. App. 4th 1258, 1269, if the insured was legally insane, their actions cannot be deemed “willful.”  Do not alledge yourself out of coverage based on uncovered allegations in your client’s complaint.

2. Discovery of Policy limits Pre-Litigation:

The very first step in a personal injury case is to determine what the applicable insurance policy limits are that potentially cover the plaintiff’s damages.  The amount of liability coverage available in relationship to the value of plaintiff’s claims will have a big impact on the outcome of the case.  In California an insurance company must seek permission from their insured before disclosing the policy limits.  When the claimant’s attorney asks the insurance adjuster for the defendant’s policy limits, the adjuster must contact the insured and request permission to disclose the policy limits.  This rule is set forth in, Boicourt v. Amex Assurance Co. (2000) 78 Cal. App. 4th 1390.

3.  Insurance Policy Discovery During Formal Discovery:

Once the case is filed, your ability to obtain insurance policy information is even stronger.  California Code of Civil Procedure Section 2017.210 provides authority for the discovery of insurance policy information including the existence of any reservation of rights or coverage disputes.  Insurance policy information is relevant because it may assist in resolution of the case.  See, Laddon v. Superior Court. (1959) 167 Cal. App. 2d 391, 395-396.

4.  Does the Value of Your Claim Exceed the Limits of the Applicable Insurance?

When a claimant makes a settlement demand, the defendant’s insurance company must consider whether in light of the victim’s injuries and the probable liability of the insured, is the ultimate judgement likely to exceed the settlement offer?  See, Johansen v. California State Auto. Assoc. Inter-Ins. Bureau (1975) 15 Cal. 3d 9, 16.  An insurance company has an implied duty to accept reasonable settlement demands on covered claims within policy limits. See, Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal. 4th 390.  When an insurance company breaches this duty, it becomes liable for all damages proximately caused.  See, Hamilton v. Maryland Cas. Co. (2002) 27 Cal. 4th 718, 725.  If an insurance company rejects a properly worded policy limits demand in the face of injuries and probable liability that likely exceed the limits of the insurance, then “the policy limits are open” or “the lid is off the policy” and the insurance company must pay all of the insured’s damages regardless of policy limits, see Hamilton.

5.  Dealing With A Denial of Insurance Coverage:

When a defendant’s insurance company has denied coverage, you will want to investigate the pros and cons of agreeing to a stipulated judgment with the defendant, along with an agreement not to execute and an assignment of the insured’s claims against the insurance company who denied coverage.  Alternatively you may first obtain a default judgement and then try and secure the assignment.  These issues are discussed in the must read case, Amato v. Mercury Casualty Co. (1997) 53 Cal. App. 4th 825, 833.  Once a plaintiff secures the judgement and or assignment they may bring a direct action against the insurance company of the debtor insured under California Insurance Code section 11580, subdivision (b)(2).

Understanding these basic insurance law concepts will greatly increase your ability to get personal injury cases settled promptly.

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In his 20 years of law practice, Al has handled more than 40 jury trials. This experience, combined with a commitment to ethics and integrity, has earned Al an excellent reputation throughout the San Francisco Bay Area legal community. He is the recipient of Martindale-Hubbell‘s “AV” peer rating, which signifies preeminent legal ability and ethical standards, and has been named a Northern California Super Lawyer every year since 2006. In 2009, Al was awarded the prestigious 2009 Civil Justice Award by the San Francisco Trial Lawyers Association, given to attorneys who show integrity, grit, tenacity, ethics, and great advocacy skills, and who contribute to the betterment of consumers and/or injured victims and their families.


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  • Noel Lorenzo

    My son had an accident in Los Angeles Ca last year. The lawyer of the injured person was asking permission from my insurance to disclosed my policy limits. Should I disclose it or not. I research on the Internet and found 2 California accident lawyers said that it’s better to disclose to prevent from a lawsuit. What happen if they ask more than my policy limit of $50,000 dollars. The injured person had a laceration on her face but my insurance said that the had not received any medical expenses and picture of the lacerated face. Please advice. Thanks.

  • Hi Noel – It is generally best to disclose your policy limits so that your son’s insurance company can collect information and determine if they need to offer the whole policy, if it is demanded. Generally, if your son’s insurance company refuses to pay a valid policy limits demand, then the insurance company is on the hook if there is an excess judgement. These legal concepts are explained in an article called, The Letter Perfect Policy Limits Demand Letter, written by Ronald Cook, which can be found at The California court of appeal decision of Levi BOICOURT, Plaintiff and Appellant, v. AMEX ASSURANCE COMPANY, is a good example of these concepts, and explains why your son’s insurance company is calling and asking for this permission.