November 2014 Network Journal - Pg 16
Attorney Question Of The Month
Last month we asked our affiliated attorneys a somewhat hypothetical question about lawsuits and insurance. That one product invites the other action is an idea we hear now and then. We thought it was time to go to the litigators and find out if it is true. We asked–
It has been said that insurance invites lawsuits. Do you believe this is true? Have you any direct experience showing whether or not those with insurance are more likely to be sued for damages?
So many affiliated attorneys responded that we continue with their comments and will need to run into next month to wrap up all the responses to this question.
Michael W. Maurizio
Maurizio, Campanella & Sharpe
PO Box 1849-1508 W. Main St., Marion IL 62959
Many times a lawsuit is filed prior to an attorney having any knowledge that there is insurance so, inviting a lawsuit, is not applicable. I do believe that a defendant having insurance will affect the value placed on a lawsuit. Further, the fact that defendant is insured is generally not admissible during a trial.
James Edmund Oliver, Jr.
Durflinger Oliver & Associates
711 St. Helens Ave., Ste. 209, Tacoma, WA 98402
Insurance is a double edged sword that offers protection even as it invites lawsuits. Every day in my Tacoma law practice our associate attorneys and I decide which civil cases to accept based simply on this bottom line: How much is the case worth, and how likely are we to collect?
Insurance coverage factors in heavily roughly 99% of the time as the insurance company’s pocket is the only pocket from which we are likely to collect any money, especially if the defendant can bankrupt out of any future judgment.
What does insurance do? In certain cases the insurance contract obligates the insurance carrier to defend the insured and indemnify, or pay damages for, the insured if a court so orders. Incidentally, if your case actually makes it to trial, which is rare, the jury will likely never hear about your insurance protection because there are rules prohibiting mentioning your insurance and any prior claims by or against you.
When I was on the insurance defense side of the law, I would routinely ask the court to remind the ambulance chaser across from me that he and his witnesses could not mention insurance coverage in front of the jury. Again, very, very few cases ever make it in front of a jury as most are settled by the insurance company and the plaintiff well before trial.
Some insurance claims have what’s referred to as “nuisance value,” which means that even if the underlying case is weak, the carrier might just pay a token amount of money to make a covered claim go away. Nuisance value is generally the minimum amount of money that an insurance defense attorney would charge to defend a case. In Washington State when I was on the defense side of the table in the late ’90s the nuisance value of a typical car accident was about $2,500. This was because of the fact that if I started working on a case, $2,500 was the minimum amount of money that my firm would bill for my work.
Many weak, meaning “defensible,” cases were settled for $2,500 just to make the plaintiff go away because at the end of the day, that was probably the least expensive way of getting rid of a case with the least amount of risk. Remember the grandma burned by hot coffee who sued McDonald’s and got enough money to buy an Eastern European country? So does the average insurance adjuster, and they’re still gun shy about it.