Understanding the available insurance coverage is essential to determining the value of a claim and shaping your litigation strategy. One of the most critical components of any injury case is uncovering policy limits — the maximum amount an insurance company will pay out for a claim under a specific policy.
Effective policy limits research can make the difference between settling a case for a reasonable amount and prolonging litigation unnecessarily.
This article will walk you through how to conduct effective policy limit research in injury cases, using a combination of legal tools, strategies, and best practices.
Why Policy Limit Research is Crucial in Injury Cases
Insurance is often the primary source of compensation for injury victims. Knowing the available Policy Limit Research helps attorneys and claimants assess the realistic value of a case, negotiate settlements, and make informed decisions. On the defense side, understanding policy limits allows attorneys to determine potential exposure and evaluate the feasibility of settlement or trial.
The main reasons why policy limits research is vital include:
Case Valuation: Knowing how much insurance is available helps determine a claim’s financial worth and whether pursuing further legal action is worth it.
Settlement Negotiations: Accurate knowledge of insurance coverage provides leverage in settlement discussions. If the available policy limits are near the total damages, a reasonable settlement may be more likely.
Legal Strategy: For plaintiffs, knowing policy limits informs whether to proceed with litigation or settle, while for defendants, it helps determine the amount of risk exposure.
Step-by-Step Guide to Effective Policy Limit Research
1. Start with a Demand Letter
Before litigation begins, send a demand letter to the insurance carrier requesting the following:
Declarations Page: This will show the limits of the liability coverage under the policy, the insured parties, and any applicable deductibles or exclusions.
Full Insurance Policy: Request the full copy of the policy to examine not only the limits but also any exclusions, conditions, and coverage nuances (e.g., defense costs within limits, exclusions for certain types of damages).
Umbrella or Excess Policies: If the initial coverage appears insufficient, request information about any umbrella or excess policies that may provide additional coverage.
A well-crafted demand letter can prompt insurers to disclose the necessary information early on, potentially avoiding costly litigation. In some jurisdictions, insurance companies are legally obligated to provide this information upon request.
2. Use Discovery Tools During Litigation
If policy limit information isn’t provided voluntarily, formal discovery tools come into play. This is the primary method for uncovering insurance information during litigation. Key discovery tools include:
Interrogatories: Ask the defendant (or their insurer) to identify all policies under which coverage may be available for the claim, including primary, excess, and umbrella policies.
Sample question:
“Please provide the details of any liability insurance policies that may cover the claim made by the Plaintiff in this case, including but not limited to primary, excess, umbrella, or self-insured retention policies.”
Requests for Production: Request the insurer’s records, including the policy declarations page, the entire policy, and loss run reports (which detail prior claims and policy usage).
Depositions: During depositions, ask the defendant or the insurer’s representative about the scope of their coverage. In many cases, insurers may resist disclosing policy limits, but under the right circumstances, courts will compel disclosure.
3. Use State-Specific Statutes for Disclosure
In many jurisdictions, some specific statutes or rules require insurers to disclose policy limits. These laws are intended to promote transparency and facilitate settlement. Familiarize yourself with the rules in your state to determine whether insurers are required to disclose coverage information upon request or whether you need to file a motion to compel.
For example, in California, CCP §2017.210 mandates the disclosure of insurance policy information without requiring formal discovery in personal injury cases.
In New York, CPLR 3101(f) allows the disclosure of the policy limits in personal injury cases.
Understanding these local rules can make your efforts more efficient and can help in crafting effective motions or requests for disclosure.
4. Follow Up with Subpoenas If Necessary
If the insurance company is unresponsive or refuses to provide the necessary documentation, you may need to subpoena the insurer directly. A subpoena can require the insurer to produce:
The full insurance policy
Any documentation related to the claim
The current status of claims, limits, and payments made under the policy
Subpoenas are particularly useful when dealing with large insurers or third-party claims administrators who might not be as responsive to informal discovery requests.
5. Review Loss Run Reports
A loss run report provides a history of all claims under a policy. It includes information about the amount of money paid out to date and any reserves set aside by the insurer for ongoing claims. This report can be invaluable when trying to trace how much coverage remains available.
Loss runs also reveal if the policy’s limits have already been exhausted by other claims, or whether defense costs have been paid out of the policy’s limits (which can reduce available indemnity coverage).
Look for Excess or Umbrella Policies
In high-value injury cases, the defendant may have excess insurance or an umbrella policy that provides additional coverage once the primary policy’s limits are exhausted. You should always ask about excess or umbrella coverage, as these policies can substantially increase the total available coverage.
Excess policies typically extend coverage beyond the primary insurance policy once the primary policy’s limits are exhausted, but only for certain types of claims.
Umbrella policies provide broader coverage and often include higher limits for various liability claims, including personal injury.
Make sure to ask explicitly about these policies and their terms in your discovery requests.
Assess Self-Insured Retentions (SIRs) or Deductibles
Some policies may have a self-insured retention (SIR), which is essentially a large deductible that the insured must pay before the insurer begins covering the costs. Be aware of these details, as they can affect how much coverage is actually available for the claim.
Make sure to request documentation explaining any SIR or deductible requirements and ensure that they do not reduce the effective limits of coverage.
Use Public Records and Freedom of Information Act (FOIA)
In some cases, particularly when dealing with government agencies or public entities, insurance policy information can be uncovered through public records requests or FOIA requests. These requests can provide details about the policy limits, coverage types, and the carrier’s liability.
Conclusion
Knowing the policy limits in an injury case allows attorneys to make informed decisions regarding settlement negotiations, litigation strategy, and case valuation. By following a systematic approach to policy limit research, including sending demand letters, using discovery tools, leveraging subpoenas, and reviewing loss run reports, attorneys can uncover the coverage available for their clients and protect their interests.
The key is to start early, be thorough in your requests, and understand the legal framework in your jurisdiction to ensure the information you need is disclosed.
By utilizing these tools and strategies, you can effectively manage the financial aspects of personal injury cases and ensure your clients are receiving the full compensation they deserve.
