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If you have a legal reason to believe your client could actually be awarded over policy limits, go for it. If you have no legal reason, a policy limits demand is just as effective.
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I have a legal reason. It’s just that all of my prior demands pre-suit have been over policy limits and I’m wondering if I should give them the opportunity to settle within their policy limits.
Is the insured collectible? Able to contribute out of pocket to resolution? Then account for that in the demand.
Also, if you’re looking to put pressure on the carrier to offer the policy limits, it may be beneficial to demand more. You put the insurance counsel in a position to advise the defendant to get personal representation by demanding more than the limits while also communicating that your client has authorized you to pursue any excess verdict against the insured’s personal assets. Then the insured’s personal counsel will apply pressure to the carrier to tender the limits. This would also set up the post-judgment bad faith claim against the insurer.
Right you are, I wasn’t very clear on that - have to reduce the demand to the policy limits (or less) after the appearance of personal counsel under my scenario above, but that demand should include a statement to the effect of “if our demand is refused and we are forced to take this matter to verdict, we will ask the jury for more than policy limits and intend to collect any excess award from your insured’s assets.”
I personally never let the defense know how much I want until after discovery. Only exception is if the defense asks me to cap damages at policy limits in exchange for waiving liability.
Don't you have to initially disclose damages as per your State's rules of civil procedure?
It depends on the state. In my state the only reason would be gross negligence. IMHO, going in at policy limits when the case doesn’t warrant it screams to an adjuster that you’re out of your depth (I was an adjuster before law school). If the case warrants $1M, stand firm at policy limits until mediation, and then come to play ball. If it doesn’t warrant policy limits, be very thoughtful about your demand and discuss it with your client. This are the types of cases you need to really think.
Rising Star
You have to make a determination whether the case is a policy limit case or not. If it is, barring some exceptional circumstances where the defendant has substantial assets, step one is to demand the policy. This gives the carrier two choices: either (1) accept and make the case go away or (2) take a chance that the matter will eventually proceed to judgment and open the carrier to an above policy judgment, for which it will eventually be on the hook for by way of an assigned bad faith claim. Making a demand above the policy doesn’t expose the carrier to bad faith because it cannot accept a demand that exposes its insured above the policy (in your case, accepting the demand would expose their insured to $500,000). So your $1M demand has zero effect and they can ignore it at no cost to them or their insured. The play in just about every policy limit case is to demand the policy. Period. If they tender, case over. If they don’t, they’re exposed and your next demand can be for the “full value” of the case (whatever that may be). I usually tell them in my demand that if they don’t accept the policy limit my next demand will be x. Now, you need to have a certain amount of credibility and the carrier must actually be afraid that you would take this all the way to judgment. That’s where guys like me with multiple 8 figure verdicts have an advantage and why younger less experienced attorneys can’t pop policies as easily as I do. Unfortunately (and I mean this in the nicest way), by demanding more that the policy out of the gate you kind of exposed a lack of understanding of the process and they may not take you as seriously as necessary. But, you can fix that. Make a subsequent demand asking for the policy limit and this time, give a shortened response time (they’ve had time to evaluate the case). If they don’t accept, keep litigating and hold your ground. Never ask for anything less than the policy and in fact, if you’re inclined to go to mediation, make it a condition of mediation that all negotiators be above policy limits based on your belief that the lid is open. Or another way to do it is to agree to mediation only if their starting number is $500,000 or more. Feel free to DM me.
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Ouch. Don’t you guys have a serious cap on non-economic damages there?
My trial mentor taught me an important lesson - pigs get fat but hogs get slaughtered
Rising Star
OP- check out the book “Running with the Bulls”. It really gives you some great insight into this type of negotiating
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I appreciate it! I own it but haven’t read it yet.
“By now, there is no real question of your clients liability, and there has been ample opportunity to consider the substantial damages. This offer to release x represents a significant concession by my client, who will suffer from the effects of your clients negligence for the rest of her life. In (state) an insurer has an obligation and a fiduciary duty to equally consider the interests of its insured. If you do not unequivocally accept the unambiguous terms of this offer to settle, we WILL obtain a judgment far beyond this reasonable demand. We will then collect the full value of our clients claim and any and all extra-contractual damages allowed by law. We strongly suggest that you provide this offer to your client and recommend that they obtain personal counsel.”
The best ones I see have enumerated terms that include either execution of an enclosed LLR or that provide that acceptance of the offer must be made by tendering the check with an LRR drafted by defendant that adheres to x terms. Spitballing but usually something that makes them uncomfortable like “defendant agrees that plaintiff has not been made whole and no party makes any representation as to the sufficiency of the bargainer for consideration.” Or any provision in the release re a choice of law shall be deemed a counteroffer. They may balk or kick it to some other layer of counsel and then you have additional people paying attention to the claim which can work in your favor. If your state COA is hardcore mirror image rule textualists they’ll hold a policy blown on stuff like “any inquiry re liens or communication other than acceptance shall be deemed a rejection,” but some states have statutes protecting a party that is making a good faith effort to investigate a demand so that an inquiry re medicals or liens shall not be a rejection, and mandate a minimum time limit
What kind of case? Not unusual for a person with a 500k policy to have an umbrella policy as well.
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Auto accident. High damages ($500k in lost wages alone). Liability, while not currently admitted, is very clear. Six-figure pre-suit offer from insurer, but not high enough.
When I get a demand for the policy, I generally try to determine if they actually want the policy (i.e. it's an inflexible demand) or if that's merely their starting demand (i.e. their goal is a percentage of that). More often than not, it's a percentage of that.
Just be communicative. Say that if they had coverage beyond 500k, my demand would be X, but in this case I'm making a demand of the policy and unwilling to consider anything below that (if that's actually true - 9 times out of 10 it's not).
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Thank you! It’s actually true and I will try the case if I don’t get that.
From the defense side I think that just makes it easier for the carrier to say no, interested to see what others think though.
My only concern would be extra-contractual damages i.e. bad faith
If there’s no bad faith exposure then pound sand lol it definitely makes it easier to say no
Rising Star
Depends on the state, but typically if you demand more than the policy, then the bad faith argument goes out the window. The only time I will demand more than the policy is after my policy demand is rejected (this is assuming that you actually have a case worth the policy limits)
Send a good policy limits demand. ID here and I basically recommend ignoring all demands above policy limits as they are meaningless. Why would a carrier pay more than limits, if the limits are all they will ever be contractually obligated to pay in the event of a judgment? Your demand should offer a limited liability release of the defendant in exchange for limits. That means you can still pursue the defendant to the extent any other insurance exists. If they don’t settle within limits you actually have more wiggle room for a subsequent demand, as they’ll be on the hook for bad faith from the insured and any excess (make sure they have notice too).
If ur jx allows it, the best time to send the demand is immediately following suit but before counsel has answered or entered an appearance, so you can send it to the adjuster who will not forward it to defense counsel in time. You want it delivered on a Friday night at around 8pm before a holiday weekend.
If the value of the injuries substantially exceed the policy limits, you must put together a settlement package asap and present it to the carrier with a very short time period to respond.
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And ask for policy limits? Why do I have to do this quickly?