Attorney Question of the Month

This month we wrap up attorney responses to 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?

Peter N. Georgiades
Greystone Legal Associates, P.C.
1712 E Carson St., Pittsburgh, PA 15203
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Insurance does not invite lawsuits. Injuries invite lawsuits. Indeed, in a shooting case, an injured party will not likely even know whether a prospective defendant has applicable insurance until after a suit has been filed.

It is true that after an injured party has consulted with counsel, the absence of insurance may well either dissuade a plaintiff from pursuing the matter further, or cause counsel to recommend settling a claim for less than would be demanded from an insurance company. This will be the case, however, only when the defendant is without assets or is otherwise “uncollectable.” If the defendant has any substantial assets which may be attached to satisfy a judgment (e.g.: a home or other real estate; bank accounts; stocks; expensive firearms; ownership of a business; payments coming in from royalties or on a contract) the plaintiff is likely to pursue the matter and hope to collect out of the personal assets of the defendant. This puts the defendant’s entire estate at risk.

If an individual either has nothing or has taken legal steps to put his assets beyond the reach of creditors, the existence of insurance might cause a plaintiff to pursue a matter the plaintiff would not pursue in the absence of insurance.

But that will have no economic effect upon the “uncollectable” defendant; if he has nothing he will pay nothing whether he is sued or not, and if he has insurance the insurance company will pay (up to the limits of the policy), and still the “uncollectable” defendant will pay nothing out of his own pocket.

There are many reasons to purchase or forego insurance. In 34 years of my litigation practice, I have never found “inviting law suits” to be among them.

John P. Sharp
Sharp & Harmon
984 Clocktower Dr., Springfield, IL 62704
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First, if a person is uninsured and otherwise without assets, it does not mean they could not be sued; it just means if the plaintiff prevails against them in a lawsuit, receiving a judgment in their favor, the plaintiff would have a devil of a time ever collecting the judgment. The old saying, “you can’t get blood out of a turnip,” immediately comes to mind.

Second, insurance by itself does not invite lawsuits. For until some event occurs forcing disclosure of the fact that you are insured, no one knows if insurance is available or not. The mere fact of being insured does not open you up to being sued. The action which opens the door to being sued could, for example, be shooting someone entering your home at night without your consent. Once the action occurs, disclosure of the fact you are or are not insured may soon follow.

Third, those who have insurance may be more likely to be sued for damages. An attorney representing an injured party would certainly look for insurance coverage at the outset to avoid being involved in litigation with little chance of financial remuneration. However, just because a person may not be insured, if they still have assets such as real estate, stocks, bonds, bank accounts, etc., they could still be sued and their assets put at risk or lost if the plaintiff prevails.