How to Find Out Someone’s Insurance Policy Limits After an Accident
Knowing the Amount of Insurance Coverage Available to Pay Damages Helps You Negotiate a Reasonable Settlement
Obtaining information is critical in any negotiation, including those involving product liability, slip and fall, and auto accident settlements. And discovering the insurance policy limits for all potential defendants (driver, employer, property owner, etc.) is one of the most significant pieces of information you can uncover in a personal injury claim.
But the insurance adjuster may refuse to disclose policy limits during the claims process. Or ignore your request for this information.
Depending on what state’s laws apply, which court (federal or state) has jurisdiction over your claim, and whether you have filed a civil action (lawsuit), the insurance company’s refusal to disclose the liability insurance coverage available may violate the applicable state code or civil procedure laws. And in some situations, it may provide a bad faith cause of action, enabling you to recover more personal injury damages although the defendant has limited assets.
This article explains when an insurance company must reveal policy limits to you or your attorney in a personal injury claim. Knowing the coverage limits is necessary to determine if you have a viable case, how much money you should demand, and whether you should accept a specific settlement offer.
Keep reading to learn more about the disclosure of policy limits in tort claims.
And call our firm if you have questions about car accident laws in Virginia: 804-251-1620 or 757-810-5614. See why others vote us among Virginia’s best lawyers in auto accident, workers compensation, traumatic brain injury (TBI), and construction accident claims.
What are Insurance Policy Limits?
All insurance policies – including automobile and homeowners insurance covering liability for bodily injury and death – have policy limits.
An insurance policy limit is the most money an insurance company will pay for a claim the contract covers.
Why Does the Insurance Company Want to Hide the Policy Limits from Me?
Insurance companies want to guard the policy limits and prevent you from knowing how much money is available to compensate you for several reasons.
First, to save money.
An insurer may consider any settlement below the coverage limits as a win.
Second, some insurers and their defense attorneys believe that a plaintiff’s demand for damages will grow if the plaintiff discovers the defendant has high policy limits.
For example, suppose you suffer a thumb sprain, head trauma, and post-concussion syndrome in a rear-end collision. However, most of your symptoms resolve with physical therapy and medication within a few months.
If the negligent driver has liability insurance coverage of $30,000 and limited assets, your attorney will likely demand approximately $30,000 to settle the case.
But suppose you suffered these injuries in an Uber accident, meaning the negligent driver was logged into the rideshare app and giving passengers a ride when he struck you.
Personal injury attorneys know that Uber has $1 million in third-party liability coverage for its drivers. Therefore, an attorney would likely demand more than $30,000 to settle the case, even though the damages are the same because he knows more coverage is available.
Insurers worry that the same thing will happen – increased demands – if they disclose the limits of liability coverage too soon. And they are probably right.
Third, the insurance adjuster and defense counsel may consider the limits of a liability insurance policy irrelevant to the substantive issues in the case: liability (i.e., whether you can prove the defendant’s negligence caused your harm) and damages.
Why Do I Need to Know the Insurance Policy Limits?
Creating conflict between the insurance company and its insured (the alleged defendant) is an effective method for negotiating a better settlement in insurance claims.
And uncovering policy limits and incorporating this knowledge in settlement demands is the best way to cause this conflict.
Here’s why:
The Insurer Owes Its Insured Several Duties
Under a liability insurance policy, an insurer owes duties to its insured because it is first-party, not third-party insurance. These obligations include acting in good faith, defending the insured in lawsuits, indemnifying the insured (paying damages awards up to the coverage limits), and settling a claim within the policy limits when liability is clear.
A Failure to Settle May Result in an Excess Verdict (Judgment)
An excess judgment is a verdict (judge or jury) against the defendant that exceeds the amount of insurance coverage available.
For example:
Suppose Bill buys an auto liability insurance policy that provides $30,000 in coverage against bodily injury claims.
A few months later, Bill’s negligence (texting while driving – a leading cause of motor vehicle crashes) results in Jane suffering whiplash and a back injury, causing the need for a lumbar spinal fusion.
Jane’s medical expenses alone exceed $50,000. However, the insurance company (State Farm, Geico, etc.) disputes liability and refuses to offer a settlement, although Jane’s lawyer tells the adjuster Jane would accept the policy limits.
At trial, the jury awards $175,000 in damages to Jane. This amount equals Jane’s medical bills, lost wages, and tens of thousands of dollars for scarring/disfigurement, physical pain, and suffering.
This $175,000 award is an excess verdict because it exceeds the $30,000 in coverage.
And the defendant (Bill) is personally responsible for the judgment amount exceeding his policy limits.
The Insured’s Interests Differ from the Insurer’s in Personal Injury Claims where the Potential Damages Exceed the Coverage Limits
Ongoing litigation is stressful not only for you (the plaintiff) but also for the insured.
Usually, the insured defendant wants the insurance company to settle the case and make it go away so the insured does not have to participate in written discovery, depositions, and trial. In addition, the insured wants to avoid an excess verdict that could bankrupt them. Indeed, unless the defendant has self-insured retention, they likely have no problem with the insurer paying all the policy limits to prevent litigation.
In contrast, the insurer wants to save money and avoid paying the total coverage amount. And refusing to reveal policy limits aids this goal.
But this tactic may lead to an excess verdict.
An Excess Verdict May Lead to a Bad Faith Claim Against the Insurer, Allowing You to Collect More than the Coverage Amount
An insurance company that refuses to settle a claim against its insured for an amount within the policy limits may be liable to the insured if a judge or jury renders a verdict that exceeds the coverage amount. Indeed, the insurer may have to pay the entire judgment regardless of the policy limits.
Courts have explained this rule exists because the insurance company controls the following:
- Investigation of the claim
- Defense of the case, often selecting the defense attorney from its panel
- Negotiation and settlement of any claim or lawsuit
Put another way: If the insurer could have protected its insured from an excess verdict but didn’t, the insured may sue and recover the entire amount of the judgment.
Let’s take another look at the example with Bill and Jane.
After the court awards the excess verdict, one of three things will likely happen:
- The insurance company will pay the entire judgment voluntarily to avoid a bad-faith lawsuit.
- Bill will sue his insurance company for the excess verdict, alleging bad faith and breach of fiduciary duty.
- Bill will assign his bad faith claim to Jane in exchange for Jane’s promise not to seek more than the policy limits from Bill personally. Then Jane will file a lawsuit against the insurance company directly.
This excess judgment allows you to collect more money than you could from the individual defendant directly.
Putting it Together: Knowing the Policy Limits Allows You to Make Settlement Demands that Could Result in Recovering More than the Insurance Coverage Permits. Or, the Insurer’s Disclosure of the Coverage Limits May Shorten (or Avoid) Litigation, Saving You Time, Money, and Frustration
When you know the insurance carrier’s policy limits, you can use this information for two purposes:
First, if your case is worth close to the policy limits (or more), you can scare the insurance adjuster into offering the coverage amount by focusing on the potential for an excess verdict that puts the insurer on the hook for more than the limits. The insurer’s desire to save a few thousands dollars could haunt them if the jury awards significantly more
Second, if you suffer catastrophic injuries resulting in damages that exceed the insurance coverage and the defendant driver has limited assets or income, you can avoid the stress, cost, and time associated with a lawsuit by accepting a policy limits settlement instead of putting yourself through pretrial discovery or going to trial to get a judgment you will never collect in total.
How Do You Discover the Policy Limits?
Now that you know why uncovering the coverage limits can put more money in your pocket after an accident, let’s look at how you get this information.
The methods available depend on whether you have filed a lawsuit.
Whether an insurer must reveal policy limits pre-suit depends on whether a statute, regulation, or judicial precedent (case decision) compels it to do so upon request.
Each state treats this issue differently.
But this article examines how to discover insurance policy limits in Virginia before filing a civil action.
Determining the Limits of Insurance Coverage in Virginia Before Filing a Lawsuit
Several Virginia statutes address the pre-suit disclosure of insurance coverage limits.
Use Virginia Code Section 8.01-417(C) to Force the Insurer to Disclose Insurance Policy Limits in Motor Vehicle Accidents Resulting in Injuries
Virginia Code Section 8.01-417(C) compels an insurance company to disclose the limits of liability of any motor vehicle liability or any personal injury liability insurance policy that may apply to the claim if you or your attorney make a written request that includes the following information:
- Name of the alleged insured/tortfeasor (the person who caused you harm)
- Tortfeasor’s physical address, if known
- Motor vehicle accident date
- Claim number, if applicable
- Medical records, medical bills, and proof of wage loss related to the claimed injury show losses equal to $12,500 or more.
The insurer must respond in writing within 30 days of receiving your request for policy limits. And the response should include the coverage limits and the tortfeasor’s physical address.
If, however, your medical bills and wage loss total less than $12,500, the insurer does not have to disclose coverage limits to you pre-suit unless law enforcement charged the alleged tortfeasor with one of the following criminal offenses (and your injuries arose from the same incident resulting in the charge):
- Maiming of another resulting from driving while intoxicated (Code Section 18.2-51.4)
- Driving while intoxicated (Code Section 18.2-266)
- Driving under the age of 21 after illegally consuming alcohol (Code Section 18.2-266.1)
- Refusing to have a breath sample taken to test for blood alcohol content (Code Section 18.2-268.3)
- Driving a commercial vehicle – tractor-trailer, tow truck, etc. – while intoxicated (Code Section 46.2-341.24)
Whether the alleged tortfeasor gets convicted is irrelevant to the policy limits disclosure issue.
The insurer’s obligation to disclose policy limits does not prohibit the insurance company from arguing the policy does not apply to the alleged injury.
Use Virginia Code Section 8.01-417(D) to Force the Insurer to Disclose Insurance Policy Limits in Motor Vehicle Accidents Resulting in Death
You can obtain insurance policy limits with a written request in wrongful death cases like claims based on car crashes resulting in bodily injury.
Under Virginia Code Section 8.01-417(D), you (or your attorney) must send a written notice to the insurance company that includes the following items:
- The decedent’s death certificate
- The certificate of qualification of the personal representative of the decedent’s estate
- The names and relationships of the decedent’s statutory beneficiaries (spouse, child, parent, etc.)
- Medical bills
- Documents showing the source, amount, and payment history of the claimed income loss for each beneficiary (if applicable)
- Tortfeasor’s name and physical address
- Accident date
The insurer must disclose the policy limits within 30 days of receiving the request, regardless of whether it contests the policy’s applicability to the personal representative’s claim.
Use Virginia Code Section 8.01-417.01 to Force the Insurer to Disclose Insurance Policy Limits in Premises Liability Cases at Residences (Slip and Falls, Dog Bite, Etc.)
If you got hurt at someone else’s house, Virginia Code Section 8.01-417.01 allows you to obtain the liability limits of any homeowners insurance policy or any personal injury liability insurance policy potentially applicable to the claim.
As with claims for motor vehicle injuries or wrongful death, you must request coverage amount in writing and provide the following:
- Injury date
- Residential address where the injury occurred
- The name of the residence’s owner
- The claim number, if applicable
- Documents showing medical bills and wage loss equal to $12,500 or more
The insurer has 30 days to respond.
Use Informal Methods if None of These Statutes Apply
Try informal methods to obtain the coverage amount if your claim does not meet the criteria of these statutes.
For example, some insurance adjusters will tell you the policy limits, although they don’t have to. But ask for verification in writing.
Another way to determine the insurance amount is to ask the defendant driver directly.
Remember, the defendant wants to avoid an excess verdict that could bankrupt them or cause financial hardship So, the two of you share an interest that could help you get the policy limits pre-lawsuit.
Determining Policy Limits After Filing a Lawsuit
You can use several tools to obtain coverage limits after bringing a civil action.
The Insurer Must Disclose the Policy Automatically if You Bring a Lawsuit in Federal Court
Rule 26 of the Federal Rules of Civil Procedure requires a defendant to provide the following (whether you request it or not):
- For inspection and copying as under Rule 34, any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.
This definition refers to liability insurance policies.
In addition to obtaining a copy of the insurance contract, you may use interrogatories, requests for admissions, and depositions to get other material and relevant information related to policy limits and settlement offers.
The Insurer Must Disclose the Policy if You Bring a Lawsuit in State Court and Ask for the Contract
Although state courts in Virginia do not have a mandatory disclosure rule like that found in the Federal Rules of Civil Procedure, Rule 4:1(b)(2) of the Rules of Supreme Court of Virginia says you can discover the existence and contents of any liability insurance agreement (including policy limits) in pretrial discovery. Specifically, the rule says:
Insurance Agreements. A party may obtain discovery of the existence and contents of any insurance agreement under which any person (which includes any individual, corporation, partnership or other association) carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment. Information concerning the insurance agreement is not by reason of disclosure admissible in evidence at trial. For purposes of this paragraph, an application for insurance will not be treated as part of an insurance agreement.
You should, therefore, use discovery requests to get a copy of the insurance contract if you do not know the policy limits already.
Helping Accident Victims Get the Information Needed to Negotiate Fair Settlements
Litigation is stressful. Using the law to get the compensation you deserve can be as frustrating as recovering from an injury.
Our law firm uses available methods to discover the policy limits and pressure the insurance company into making reasonable settlement offers. In doing this, we help you avoid costly and draining litigation.
Contact us today so we can get the information you need from the insurance company to resolve your case successfully.
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