Or Why You Might Want an Umbrella
Last year we had a client pull out of a driveway, across traffic colliding with another vehicle while trying to merge. Our client thought the other vehicle had stopped to let him in. It was dark out, I guess not.
This seemed like a pretty straight forward accident. There was about $10,000 of damage to our client's sports car, and $5,000 to the other vehicle, a small economy car. But NO- there's more.
The other driver went to the medical clinic complaining of back pain. The next call was to a lawyer, after which, the other driver immediately started therapy with a chiropractor.
Our client’s insurance company reached out to the claimant’s attorney 90 days after the accident for an update, and was advised the claimant had herniated (bulges) 5 discs in the cervical lumbar area. Based on a discussion with the attorney, our insurance company set up a $30,000 reserve for the claim. Further investigation of claim history showed 2 previous auto injury claims in 2000 and 2004 both head/neck/back related; with different insurers.
Working into the five month gap since the accident, our client’s insurance company spoke by phone with the claimant's attorney and was advised the injured party had already spent more than $200,000 on medication and therapy.
After seven months, the claimant’s attorney submitted documents requesting payment of the full policy limits of $500,000. They claimed: past meds and pain & suffering of $450,000, and future expectations of additional meds and pain & suffering of $650,000, for a total of $1,100,000.
Eight months after the accident the claim was settled for $400,000.
One critical side note - this car was registered out of state at a vacation property with an underlying policy limit of $500,000. The insured had a $3M umbrella policy in Connecticut that the claimant’s attorney did not source. The claimant's attorney advised that if he knew of the umbrella he would have worked for a larger settlement.
The moral of the story here is don't have a fender bender with a claimant with spinal issues and insurance history. Or realistically, make sure you have a substantial umbrella to protect yourself against these unforeseeable losses.
COMING SOON "ASK SHEPARD"!