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 Posted: Thu May 28, 2009 11:59 pm Post subject: Required to release at-fault party for damages beyond limit? |
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I live in California, and I was in an accident where the other driver was found 100% at fault. I do not have collision or underinsured/uninsured coverage, so i am working directly with his insurance company.
They decided to call my car a total loss. His property damage limit is $5000, which is about $3500 less than the total value of my claim. His insurance company is requiring me to sign a release that says I will accept only the $5000 and not pursue the at-fault party for the remainder of the damages directly.
Are they allowed to force me to release the at-fault party for the remainder of the damages before paying me? If they are, then is the only way for me to get all of what I deserve to hire a lawyer and sue the at-fault party?
I am also curious about why the release says that it is a compromise of a disputed claim, when there has not been a dispute. |
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Silentyam
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| Posted: Fri May 29, 2009 12:58 am Post subject: |
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I suspect no one here is qualified to give legal advice (particularly me), but it's my lay understanding that an insurer's duty to deal in good faith with its insured extends to using the policy proceeds to protect the insured to the maximum extent possible. The penalties for violating this duty can be catastrophic. As for the release language, I've never seen a release without it. It's to prevent the "other party" from introducing it as an admission of liability in future proceedings.
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flint
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| Posted: Fri May 29, 2009 1:12 am Post subject: |
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Feel free to blame the state of CA for only requiring $5000 in property damage coverage.
There are only two ways the other carrier will issue payment for their $5000 policy limits... it's if you sign a release of if you obtain a judgement for $5000 or more. So you choice is to sign the release for $5000 or file suit against the at fault party. If you hire and attorney to file suit, you will then be responsible for paying this person's bill.
If you file suit the insurance company will offer a defense for their insured. Granted, it will just about amount to them offering their $5000 to the court but they will provide a defense. If you sue and win, then you will be able to collect the $5000 from the insurance company and have a pretty piece of paper called a "judgement". You'd then be able to file wits with the court to place liens on any property this person has or perhaps the state allows you to garnish the person's wages... I don't know. But you'd still need to either do that yourself or pay an attorney to do it.
A release _never_ admits to liability... it's a settlement. Unless a judge or jury places _legal liability_ on someone, the insurance company does not admit to liability upon their insured. They don't have the right to accept legal liability upon a 3rd party. The insurance company can admit that they have a legal responsiblity to pay the claim but this is different. It's just never mentioned this way outside the legal system as it serves no purpose other then to confuse people. |
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tcope
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| Posted: Fri May 29, 2009 4:46 am Post subject: |
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Hi Silentyam,
| Quote: | | If you hire and attorney to file suit, you will then be responsible for paying this person's bill. |
Are you in a position to hire an attorney? I'd suggest you to check out whether the probable attorney bill and your time is worth investing on it.
| Quote: | | I am also curious about why the release says that it is a compromise of a disputed claim, when there has not been a dispute. |
It would be better if you please share a bit more about how the release describes it as a 'disputed claim'. Is that just a general statement? Or does it depict anything else to back it up?
Steven |
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steven
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| Posted: Fri May 29, 2009 5:06 am Post subject: |
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Thanks for the replies. I'm now considering filing in small claims for the maximum $7500, which is not all that I am owed but at least it is better than $5000, and small claims does not require an attorney. It's pretty upsetting that the insurance company can force me to settle for so little  |
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Silentyam
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| Posted: Fri May 29, 2009 5:19 am Post subject: |
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Hi Silentyam,
| Quote: | | It's pretty upsetting that the insurance company can force me to settle for so little |
That's pretty much understandable, but I guess they can't force you to accept anything even though they're gonna try out their best.
But may I know what made you claim for $7,500 instead of $8,500?
Thanks, Steven |
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steven
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| Posted: Fri May 29, 2009 5:35 am Post subject: |
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| Quote: | | It's pretty upsetting that the insurance company can force me to settle for so little |
I understand why you think this but really, their insured bought $5000 of protection and this is what they have available to pay in order to protect their insured. Keep in mind, it's the insurance companies legal obligation to protect their insured. It's the state of CA that allows such pitifully low limits.
If your vehicle is worth more then $8000, you really should consider having collision insurance on it... especially knowing that _many_ people in CA are only going to be carrying $5000 in property damage coverage. |
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tcope
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| Posted: Fri May 29, 2009 5:57 am Post subject: |
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Silentyam, I understand that you are upset about what has happened to you, but as Tcope has said blame it on the state of CA for requiring such low PD limit.
However, just ask yourself whether the hassle of filing at small claim court would worth the volume of the claim or not. After all you wouldn't get more than the policy limit from the insurer. You may get a judgment against the other driver but again the judgment isn't a promise of payment. And, I doubt that he has any asset to put a lien against when he is maintaining such a low limit in his policy.
~Jeremy |
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JeremyHolter
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| Posted: Fri May 29, 2009 11:55 am Post subject: |
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It's not the carriers fault...they only have 5k period, they CAN NOT pay anymore...because that is what their insured bought...I agree with blame on Cali, for their low min. limits..  At the same time, he could've bought more...by the way Silent..have you looked at your own PD limits? Would be a good idea, could be you have the same..and this is a good opportunity to raise them...
I think were I in your place I would definately pursue the smalls claims action...that way the carrier will still have to pay the 5k, and you'll have a judgement that you can attempt to collect on from the at fault party for the balance...Check with your state, and local authoritys re: remedies to collect on the judgement...can you file a garnishment? Does the at fault party have a job? In my state, you can file for a wage garnishment with a small claims judgement...but all are different...again..if it were me...I'd for sure file it in small claims....
Re-think that collision (and comp) coverage per Tcope's advise...personally I'd have a problem with suffering an 8k loss.. 
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Lori
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| Posted: Fri May 29, 2009 1:32 pm Post subject: |
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No use getting steamed at the insurer, Sil. In situations like this, insurers would love to divest themselves of their duty to defend by cutting you a check for the policy limits.
You say the other party was "found" to be at fault. Actually, the conclusions of a peace officer as to fault aren't even admissible in court, unless he qualifies as an expert witness in accident reconstrucion.
Have you asked the adjuster to see if his insured might be willing to buy his peace by kicking in a few bucks here?
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flint
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| Posted: Fri May 29, 2009 3:59 pm Post subject: |
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Quite a bit of info on small claims court matters on the California Courts Self-Help Center website. Looks like $7,500 is the max. They seem to be saying that, if a judgment isn't satisfied, or appealed to superior court, the defendant can lose his driver's license for up to 6 years (ouch!.) Also, the judgment will show up on the records of the credit reporting agencies Not sure if the insurer would feel obligated to remove the case to superior court, under these circumstances.
OP, I'd check this guy out to see what his financial situation is.
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