The Collision

You’re driving down Irvine Boulevard in your brand new Ford F-150 truck that you purchased at Tuttle Click Ford. The light at the intersection you’re approaching has been green for sometime and you’re smiling and listening to the radio. You’re meeting your wife in Laguna Beach for lunch and it’s going to be a beautiful day .

Without any warning, a sedan slams into the passenger side of your truck. All you can remember is being knocked upside down and then rolling. After you come to a stop you’re hanging upside down with the seatbelt keeping you from falling on to broken windshield glass and an exposed broken piece of steel. You can smell the gasoline and hear people screaming.

You wake up at Mission Hospital. The doctor tells you they had to operate on your broken legs but it looks like over time, you should be OK. Before he finishes talking your right leg starts to throb. You know this is serious but it could have been worse. You say a prayer and give thanks for being alive.

2 months later…

You’ve made a good recovery and are back to work. Your Orange County personal injury lawyer is one of the best of the best and he’s handling all the investigation, insurance and legal details.

Your lawyer has filed a civil Orange County Superior Court lawsuit against the other driver. He’s insured by Mercury Insurance. It appears that just before the collision, his cell phone range and he took his eyes off the road to grab it off the passenger seat. By the time he looked back up it was too late. He admitted fault to the investigating Irvine police officer.

Through written discovery and a great deal of additional work, your lawyer determined that the responsible driver only carried a California minimum $15,000-$30,000 liability policy with Mercury. What this means is that the only insurance benefits Mercury is required to pay is $15,000. Your lawyer tells you that the other $15,000 is coverage that might be available if other people were injured. That the $15,000 is the maximum amount that would be paid out to any single victim and a total of $30,000 was available for all combined claims.

After your lawyer completes an asset background check of the responsible driver, he determined that there were no significant bank accounts or assets. In fact, it looks like even if you obtained a judgment against the other driver for more than $15,000, the chances were high that he would simply file bankruptcy.

Furthermore, your lawyer also confirmed that the other driver was not in the scope or course of employment at the time of the collision. If so, an argument might have been made that the responsible driver’s employer and company liability insurance might provide additional coverage. In this case, the other driver had recently lost his job and was unemployed at the time of the collision.

Your lawyer presents your medical records and billings to the other driver’s insurance company. After a bit of negotiation, he makes a demand for the policy limits and the $15,000 is paid. A settlement agreement is entered into and the pending lawsuit is dismissed.

Underinsured Motorist Claim

Back when he was first retained, your lawyer contacted your insurance company, State Farm, and determined that you carried a $250,000-$500,000 uninsured/ underinsured (UM/UIM) motorist coverage. What this means is that if you were injured as a result of another driver who either (1) was not insured or (2) carried inadequate liability insurance, you and your passengers could present a claim against your own insurance company in a sum for up to these amounts.

Under California law, your insurance company may not raise your rates for doing this. In fact, this is the reason you’ve been paying insurance premiums for the past 10 years. You’ve always thought of your UM/UIM coverage as a safety cushion and now you’re glad you have it.

Your lawyer placed State Farm on notice that there may be a UM/UIM claim depending on the amount of coverage the other party carried. Now that you’ve resolved the third party claim with the other driver for payment of his policy limits, your lawyer will pursue a UIM claim against your own insurance company. This is called a first party UIM claim (here’s an example).

Your lawyer puts all the relevant records together and sends them to your UIM carrier. A demand is made for the policy limits of $250,000. As before, this is the maximum amount of UIM benefits that can go to any single claimant. The additional $250,000 would be available to cover additional claims by other injured persons.

In response to the UIM claim, your own insurance carrier offers only $100,000 to settle the claim. Your lawyer negotiates further and after two weeks, your insurance carrier is willing to offer $200,000. Despite your lawyer’s follow up letters and arguments, they refuse to offer any additional benefits.

At this point your lawyer advises you that you can either settle your UIM claim for $200,000 or allow him to pursue the first party UIM claim via arbitration. In California, you don’t have the right to take your own insurance carrier to trial in a UIM claim. Binding arbitration is your sole remedy.

Your lawyer recommends arbitration and you take his advice. A formal demand for UIM arbitration is made. Your own insurance company hires a defense law firm to represent its interest. Discovery is exchanged and depositions are taken. They have you examined by their own doctors and start making one excuse after another as to why they shouldn’t be required to pay you another dime.

Your lawyer and the insurance carrier’s lawyer jointly select an arbitrator to preside over the binding arbitration. At the arbitration, both you and the other side will submit arbitration briefs, witnesses and evidence. The outcome of your case will come down to what this single neutral arbitrator decides.

Before arbitration, you take your lawyer’s advice and coordinate a non-binding mediation with the other side. This is an informal hearing that is managed by an experienced lawyer or judge and designed to try and get the parties to settle the UIM claim. Anything that’s said or done during the mediation is confidential. Nothing that happens can be discussed with the UIM arbitrator.

The mediation costs almost $2,000 per side and last about 4 hours. Your lawyer is handling your case on a contingency fee and has advanced this fee. The good news is that by the time you’re done, your experienced mediator was able to help convince your insurance company to pay its $250,000 policy limits. He’s skilled at what he does and knew exactly what buttons need to be pushed to get the deal done.

At the mediation you sign a release and you’re done. One to two weeks later your lawyer receives the settlement check and the agreed to portion of the proceeds are distributed to you.

Had your UIM claim not been resolved during mediation, you would have proceeded to binding arbitration. The costs of arbitration is easily 3-5 times greater than the mediation.

The arbitrator would have heard all the evidence and at the end of the hearing, rendered his ruling. If the amount awarded was for more than your $250,000 policy (most of the time the arbitrator is not made aware of what the policy limits are), the award is reduced after the fact and your insurance carrier is only required to pay the policy.

One of the benefits of pursuing a first party UM/UIM claim is that your insurance carrier has an affirmative obligation to handle your claim in good faith. If your carrier refuses to do this and you ultimately prevail at the arbitration, you can then turn around and sue your insurance carrier in civil court for bad faith (video) and punitive damages. You can also demand a jury trial and most insurance carriers know this.

Because of this additional exposure, many first party UM/UIM claims go relatively smoothly and are resolved at the higher end of the damages curve. It’s noted that in your earlier third party claim for $15,000 against the other driver, his insurance carrier was not required to treat you in good faith. Many consumers are unaware of this fact and because the insurance carriers for the other side do not face bad faith financial exposure, they have little if any incentive to properly evaluate and timely pay claims.

UM/UIM claims can be a bit tricky but with an experienced lawyer leading the way, they can be resolved short of binding arbitration.

Note- It’s a very good idea to carry UM/UIM coverage. Many drivers in California are uninsured or underinsured and for a slight increase in your auto policy premiums, you can substantially increase your protection. Ask your insurance agent to discuss these options with you. Contact your lawyer if you have any questions.

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Here’s an example of a first party bad faith case we resolved for $3,347,000.00

This is a recent $500,000 wrongful death UIM claim we resolved at mediation