How to Make the Defendant Driver Your Ally In UIM Cases

When a driver gets sued for injuring somebody in a car accident, they don’t have to go out and spend their own money hiring a lawyer to defend the case. They call up their car insurance company and tell it that they have been sued. They send in the papers, and the insurance company provides them with a defense attorney.

Sometimes this is an “in-house” insurance defense lawyer, other times it is an outside lawyer selected and paid by the insurance company. Either way, the insurance company picks and pays for the driver’s defense attorney. So what you have is a three-sided (or “tripartite”) relationship- insurance company, defense attorney, and defendant driver.

Whether in-house or outside counsel, the defense lawyer has a paramount ethical duty to act in the best interest of his or her client- the defendant driver. This is true even though the insurance company selected the lawyer, is paying the lawyer’s fee, and controls most of the important decisions in the litigation, including whether to settle and on what terms.

Unsurprisingly, the defense lawyer may have a certain degree of loyalty to the insurance company with the magic checkbook. Especially when the lawyer is an “in-house” lawyer who is a direct employee of that insurance company, or when the lawyer is outside counsel whose firm depends on a steady stream of business from that insurance company. I can think of at least five small local defense firms that more or less survive off of cases from one insurance carrier.

There can be instances where this dynamic can affect the course of a case. One of these is in the context of an underinsured motorist case. Assume that the negligent driver was operating a car insured by State Farm with a $30,000 coverage limit. Assume further, that my client has his own policy from GEICO with a $100,000 coverage limit. If the defendant’s liability insurance is not enough to cover the damages, my client can take advantage of $70,000 more coverage through his own policy ($100,000 – $30,000 = $70,000).

But to get to GEICO’s money, my client must first use up all the money available to the defendant under any liability insurance policy he has that applies to the accident. There can be multiple sources of insurance coverage. Perhaps the defendant is covered as a resident relative under a family member’s policy with a higher limit. Or perhaps the defendant has a million-dollar umbrella policy that might apply.

To find out, in discovery I send an interrogatory asking the defendant to identify each and every insurance policy that may provide coverage for the accident. Invariably, the insurance company’s defense lawyer just gives me the information for the insurance policy on the car the defendant was driving. They rarely, if ever, actually investigate to find out if there are any other policies that may apply.

Let’s say that in the course of investigating, either I or my client’s UIM carrier (GEICO, in this example) find out that there are other policies that might apply. We find out that there is a possibility of coverage under a relative’s policy with a $100,000 limit, and that the same relative also has a million-dollar umbrella policy. They are all sold by the same insurer that wrote the liability policy on the vehicle the defendant was driving.

Obviously, the existence of these policies was known to the insurer, and information about them was available to the defense lawyer the insurance company hired. But the lawyer never looked for other policies, and only identified the single $30,000 policy to me.

Here’s where the “tripartite relationship” comes in. The defense lawyer’s obligation is to their client- the defendant driver. It is to the defendant’s advantage for there to be coverage under the additional policies, because it reduces their potential personal liability. However, it is to the insurer’s advantage for there not to be additional coverage, because it increases the amount it may owe on the defendant’s behalf.

The defense lawyer has an ethical obligation to fight for his client to have coverage under these policies, regardless of how it affects the insurance company paying the lawyer’s bill. They aren’t always eager to pursue this zealously. So I give the lawyer a little nudge by sending a reminder in the form of a letter identifying the additional policies, reminding them of their ethical obligation to their client to fight for more coverage, and a request that they formally supplement discovery to advise me of the defendant’s position as to whether there is coverage under each of the new policies, and if there is not, to tell me why not.

This puts pressure on the defense lawyer to bend over backward showing how well he is protecting his client, and pressure on the liability carrier to accept coverage to protect the insured, and to avoid a potential complaint by the insured that the insurance company failed to act in good faith to protect them. This strategy also helps me on the back end with the UIM carrier, since once the defendant has taken a position on the coverage issue, I can then apply pressure to the UIM carrier to either agree or disagree with the defendant’s position. If UIM agrees there is no coverage under the new policies, it almost has to admit there is potential UIM exposure if the value of the damages is more than the liability coverage. On the other hand, if UIM takes the position that there is coverage under the new policies, then I have an ally in fighting to get the additional money, since it reduces (or under these facts, eliminates) the UIM carrier’s potential liability.

This where having experienced counsel adds value to the case. A working knowledge of these kinds of dynamics really helps in positioning a case to recover maximum value.