Brian Wilson over at The Nicodemo & Wilson Bull’s-Eye Blog shared this recent post with us. He shares some important information about what insurance companies don’t tell you. Thanks, Brian!
Recently, Allstate has been running a commercial where a young man who causes a collision is sued in a personal injury case and the jury returns a verdict in excess of this poor fellow’s liability insurance. The attorney for Allstate then informs the young man’s parents that the injured person can now go after and take the young man’s college fund and savings, etc.
The purpose of the commercial is obviously twofold. One, Allstate wants to sell higher levels of liability insurance. No problem there. But the other purpose is to plant the fear that “out of control” jury verdicts will mean that you lose everything and become a pauper on the streets if you get hit with a verdict in excess of your liability limits.
This is misleading and inaccurate for two reasons. First, our friends at Allstate don’t mention that if a jury returns a money verdict greater than your liability limits, you can file for bankruptcy and discharge any personal debt in almost any circumstances (unless you were driving drunk, for example).
More importantly, in the unlikely event that you get tagged for a verdict that exceeds your liability limits, it is often because the Allstates of the world put the screw job to you by handling your claim in “BAD FAITH.” Example: you cause a crash and injure somebody. You have a $50,000 liability policy. The injured person offers to settle for $25,000 - a figure much less than your liability limits. So far, so good. But Allstate makes a “take it or leave it” offer of $8,000 to the injured person.
Allstate’s unreasonable offer forces the parties to go to trial, and a jury returns a verdict of $65,000. Allstate gambled and lost. But here’s the problem: it gambled with YOUR personal assets, as you now owe the injured party $65,000, and your liability limits are only $50,000. Bottom line: if Allstate’s puny offer was considered unreasonable (because it could have settled the claim for $25,000 and not exposed you to losing your personal assets), Allstate can now be liable to YOU as an Allstate policyholder for handling your claim in bad faith. It is Allstate’s job under the law to FAIRLY evaluate the claim and take no action that favors Allstate’s interests over yours as a policyholder. If Allstate has committed “bad faith” by mismanaging a claim against you, you as a policyholder can sue Allstate for “bad faith” damages, including the $15,000 in personal liability it exposed you to, and punitive damages that punish Allstate for unreasonably exposing your personal assets.
So the next time you view this commercial, remember that in many circumstances, it is the Allstates of the world that put their own insureds in this box by making unreasonable settlement offers, and essentially gambling with their financial future and assets while trying to save a few bucks. To borrow a page from Allstate’s own playbook, their “good hands” shouldn’t be used to push their insureds off a financial cliff. That is the essence of “bad faith” claims handling practices, and the law gives you the right to fight back when you’re pushed around.
The second commercial–where the poor kid hires one of those “trial lawyers” to sue Allstate for handling his claim in bad faith–is the one you won’t see.