Tips for Maximizing Settlements
Robert Graham Fiore, Esquire
MARYLAND ASSOCIATION FOR JUSTICE AUTO NEGLIGENCE SEMINAR 2011
November 11, 2011
A. How the Adjuster’s Settlement Authority is Restricted
Most automobile liability adjusters have limited if any “authority", (that is, discretion to offer a certain amount of money), to settle cases on their own. Insurance companies generally require front line adjusters to “conference" a case for authority with a superior or with a committee as a prerequisite to making a settlement offer. Adjusters may be given wide latitude on how to negotiate the value of the claim once settlement authority is given, or may be instructed as to the initial offer and incremental increases thereafter.
Before getting settlement authority, the adjuster is expected to investigate the claim being presented, including obtaining statements from witnesses and, if possible, from the parties to the claim, gathering medical records and retaining experts to offer opinions as to the cause of an accident, the etiology of an injury or the economic viability of a loss of earnings and earnings capacity claim. The adjuster may participate in setting a case reserve on the file – an estimated potential value of the claim in light of the particular liability and damage considerations attendant to the claim.
B. Disclosure of Liability Limits
Historically a Maryland insurer had no obligation to disclose its insured’s policy limits until a suit was filed and discovery request were served to the insured demanding the policy terms and policy limits. SeeMarylandRule 2-402(c). There were many reasons why an insurer hesitated to disclose limits from the onset of a claim, but most were tied to a concern that either low liability limits or high liability limits would entice claimant’s counsel to make an unreasonable settlement demand.
Effective January 1, 2011, Md. Code Ann. Transp., §17-103 provides that all vehicle liability policies issued, delivered, or renewed inMarylandmust provide minimum liability coverage of $30,000/$60,000/$15,000.
Furthermore, new legislation now requires insurers to disclose policy limits information to claimants involved in motor vehicle accidents under certain circumstances prior to litigation being initiated. It is important to note that the new law only applies to claims involving motor vehicle accidents. The new law, which is codified in the Maryland Courts and Judicial Proceedings Article, §§10-1101 through 10-1105, took effect on October 1, 2011, but will only apply prospectively to claims filed with an insurer on or after the effective date of the new law
The statute provides that under qualifying circumstances, a motor tort claimant will be entitled to obtain from an insurer “documentation of the applicable limits of coverage in any insurance agreement under which the insurer may be liable to: (1) satisfy all or part of the claim; or (2) indemnify or reimburse for payments made to satisfy the claim." After receiving a valid request for the coverage limits documentation, the insurer must provide the information to the claimant in writing within thirty days, even if the insurer contests whether the claim is covered under the applicable insurance policy.
The law applies to property and casualty insurers, as well as self-insured entities. Further, the disclosure obligations are not limited to “liability" insurers; first-party claimants, such as persons making a claim under the uninsured/underinsured motorists coverage in the policy, will also be able to take advantage of the pre-litigation discovery device to obtain coverage limits information.
The documentation disclosed is not admissible as evidence at a subsequent trial by reason of its disclosure and the law expressly protects an insurer’s ability to reserve its rights under a policy of insurance when there is a dispute regarding whether the claim is covered under a particular policy. Specifically, the law states that an insurer’s disclosure of information as required by the Act does not constitute and admission that the claim is subject to the policy at issue, nor does it constitute a waiver of any term or condition “or any right of the insurer, including any potential defense concerning coverage or liability."
In order to obtain the policy limits information under the statute, aclaimant must first provide to the insurer, in writing: (1) the date of the accident; (2) the name and last known address of the alleged tortfeasor; (3) a copy of any available accident report; (4) the insurer’s claim number; (5) the claimant’s medical bills and documentation relating to lost income resulting from the accident; and (6) the claimant’s medical records relating to the accident. It is only if the claimant’s documented damages, i.e., medical bills and loss of income, totals at least $12,500.00, that the insurer must disclose the coverage limits as described above.
When an individual has died as a result of a motor vehicle accident, a “claimant" may be the Personal Representative of the Estate of the deceased individual or beneficiaries to a wrongful death suit. However, the law places additional requirements upon claimants in death claims in order to require the insurer to disclose coverage information. In addition to the requirements outlined in the preceding paragraph, the claimant must provide the insurer with (1) a copy of the decedent’s death certificate; (2) copies of the letters of administration issued to appoint the personal representative of the decedent’s estate; (3) the name of each beneficiary of the decedent, if known, and their relationship to the decedent; and (4) the amount of economic damages if any, that each beneficiary claims, including claims based upon the decedent’s future loss of earnings.
C. Negotiating with the Insurance Adjuster
Using words like "whiplash" doesn’t go very far when dealing with an insurance claims adjuster. Instead, you should explain that your client suffered a neck injury and describe the symptoms of whiplash, and discuss now the injury has affected your client’s mobility and ability to perform activities of daily living.
Sometimes this is as simple as using the actual medical terms and diagnoses. If the doctor mentions your client’s injury in technical terms, then use those words with the adjuster. This not only stresses that it's a diagnosed condition, but adds to the impression that you know what you’re talking about.
Your client may also have injuries that are less obvious or not officially diagnosed. Be on the lookout for these types of injuries. The mere hint of certain ailments can cause the general damages to rise. For instance, adjuster knows that any injury with potential long term effects can require a higher settlement.
Head injuries need to be mentioned even if your client hasn’t noticed any immediate effects. If the medical records, the accident police report or the ambulance run report mention a concussion or possible head injury, bring that fact to the adjuster’s attention. The adjuster knows that any kind of head injury has a potential for causing cognitive deficits and that the effects of that damage might not be apparent for a long time.
In cases involving broken bones, talk to your client’s doctor or with your expert about long term effects. When these injuries happen at the joint they often result in joint pain later in life. But because this is impossible to diagnose right away, treating doctors rarely make note of it.
When talking to the adjuster, it is good practice to ask “What information can I provide you in order to place this claim in a position for settlement?" The adjuster might give you a laundry list, but at least you will know what is important to this particular company or adjuster.
Avoid presenting a case that relies entirely on the numbers. Adjusters no longer evaluate strictly on a multiplication of accrued medical bills. Factors such as the length of treatment, the types of treatment administered, the attempts, if any, on the part of the patient to return to work are routinely factored into a claims department evaluation of a particular case.
Even when settlement discussions stall, always leave the door open for continued negotiation. Even if the parties cannot agree on a settlement and it appears the case must be tried, never forfeit a future opportunity to reopen settlement negotiations. Try telling the adjuster that you and the insurance company can evidently not agree on a settlement. This may subtly shift responsibility for not settling the case off the adjuster and onto the company. Then try for the last time to get one more offer out of the adjuster by asking him or her to get the company to review all the facts of the case one more time to see if it will increase its offer.
Sometimes, sending a draft Complaintdemonstrates to the adjuster that you are serious about the case, creating a catalyst for a fair offer. The draft Complaint itself can add certain value to the claim, if the adjuster is concerned about incurring litigation costs. Filing and serving the Complaint also creates real time constraints, even if you do agree to extend the time for an Answer to be filed.
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