What Happens When Lawsuit is More Than Insurance Coverage
My question involves an injury that occurred in the state of: Maryland
I have a close friend that was at fault for an accident with a motorcycle. They are being sued for several hundred thousand dollars due to the injuries of the motorcycle driver and they only have a $50K policy. They don't have assets near the value of the lawsuit. Will bankruptcy protect them or could they have future wages garnished? The insurance company is not telling them much just saying they want to gather more facts and that these things take time. Should my friend look at getting their own lawyer since the insurance company will almost certainly pay out the full policy so the insurance company may not care if the settlement is $100K or $5million their liability will be the same?
Re: What Happens When Lawsuit is More Than Insurance Coverage
The judgment might or might not be dismissed during a bankruptcy. It would depend on the circumstances. If the insurance company SETTLES the deal is usually that the settlement ends the matter in full, they can't continue to sue you. If you lose the suit (even with the insurance companies legal assistance) then this becomes an issue.
Re: What Happens When Lawsuit is More Than Insurance Coverage
If a settlement is made, you may wish to take the settlement offer to another attny to have his opinion as to the release of any further claims...the insurance company is likely only covering their own butt ....... 50K coverage is nothing ... I have seen motorcycle accidents go upwards to 700K just from the amount of therapy than can be needed.
Re: What Happens When Lawsuit is More Than Insurance Coverage
Generally speaking, if an insurance company believes there is a potential for excess liability (liability to the insured above the policy limits) they will send the insured a letter cautioning them of that fact and advising them of their right to retain independent counsel to defend against any claim beyond the policy limits.
If the claim is worth $5 million, it's pretty much a given that the insurance company will pay $50K. They will generally try to get a release against all further claims in association with such a settlement, but nobody here can promise you that the injured party will find that acceptable.
It sounds like no lawsuit has yet been filed. I would not personally hire a lawyer until a lawsuit was filed, or for that matter before I received a notice regard to my excess liability - and even then I would probably wait for a while to see if it looked like the case might settle for no more than the policy max (or that amount plus what I would have to pay a privately retained lawyer to represent me.)
Re: What Happens When Lawsuit is More Than Insurance Coverage
In this case, it has been my LIMITED experience that the insurance company will try to settle with the other party and close the matter, but there's no guarantee that the other party will be happy. I wouldn't think they would need a lawyer until that person files a direct suite against your friend directly. As always, it doesn't hurt to go talk to a lawyer, many of them have a free consultation.