Insurance Disclosure of Policy Limits

In a serious personal injury accident in Massachusetts, your personal injury attorney may ask the defendant’s insurer from the outset the amount of its insured’s auto policy limits. By having the insured disclose the coverage limits, you can avoid delay in settlement and possible litigation, especially if the limits turn out to be wholly inadequate to compensate you for your damages.

All states, including Massachusetts (but not New Hampshire), require that its motorists carry a minimum level of liability coverage. In our state, the minimum coverage is $20,000/$40,000/$5000. This means that if you are injured by a motorist with these coverages, you cannot recover more than $20,000 for your injuries and losses. Property damage is limited to $5000. If you had injured passengers, you could divide the available $40,000 but with no one claimant able to obtain more than $20,000.

But do insurance companies even have to disclose to you or to your personal injury attorney the limits of its insured’s policy? According to Massachusetts law, the insurer has an obligation to disclose its insured’s limits within 30-days of a written demand. Although most insurers will comply, not all do since there are minimal consequences for its failure to disclose. Further, the insurer may not be entirely honest or forthright in its disclosure. Its failure to disclose will enable the insurer to have an unfair advantage in settlement negotiations since the claimant is negotiating with an apparently low policy limit in mind. It can also force unnecessary litigation where the case could have settled for or within the policy limits. 

There are many personal injury attorneys who fail to follow up on a coverage or policy limits issue or who simply accept the insurer’s response and settle for an amount that could have been far higher if they had done their due diligence. This can be tragic for a client who suffered catastrophic injuries because their personal injury attorney simply settled for what was apparently the policy limits

Careful Scrutiny is Needed in a Request for Disclosure

At Burns and Jain, a personal injury attorney will be careful in requesting an insurer’s policy limits in a case where our client’s injuries, wage loss, and medical expenses are significant and where we suspect that the defendant’s coverage may be inadequate. In addition to requesting the insurer’s policy limits, we will also ask if excess or umbrella insurance is also available. A “red flag” is where the insurer responds to our request by only saying that “adequate coverage for this case is available. 

To satisfy ourselves that our request for disclosure has been truthfully met in cases where the insurer may not be entirely forthcoming or even outright lying, we can tailor our discovery if the matter is in litigation by drafting an interrogatory request that asks for all available insurance including excess and umbrella coverage. If a truck accident, we will ask for the commercial policy limits for both the tractor and trailer.

We can also depose the defendant who may have a different response as to how much coverage he has or subpoena a corporate representative under 30(b)(6) regarding a coverage issue. It is not uncommon to find out that the insurer was “mistaken” in the disclosure and that the insured had a $250,000 policy rather than $100,000, or that the insurer neglected to disclose an excess policy. 

Bad Faith Litigation 

Unfortunately, an insurer who fails to abide by the disclosure laws of our state is only given a $500 penalty, which is hardly punitive or that will motivate an insurer to comply. In other words, do we have to assume that insurers are not always truthful or are there any other measures to take?

In some cases, we can bring a bad faith cause of action against the insurer who failed to disclose its insured’s policy limits or who was untruthful in the disclosure. Most bad faith cases are predicated on the insurer’s failure to make a reasonable offer or any offer at all in a clear liability case with serious injuries, or who gives false or misleading information to the claimant and/or her attorney. The courts, however, do recognize a possible bad faith case against an insurer who lies about or who fails to disclose its insured’s policy limits as this deprives the claimant from adequately evaluating her case and interfering with settlement. Its own insurer, who may be forced to surrender assets due to her insurer’s failure to disclose her actual limits, may also have a bad faith lawsuit against her own insurer. 

In these cases, you might even say that the insurer was “obstructing justice.”

Retain the Law Office of Burns and Jain 

At Burns and Jain, our personal injury attorneys do the necessary due diligence in uncovering all available insurance by all responsible parties in a personal injury claim so that you can be adequately compensated for your injuries. Call our office at (617) 227-7423 for a free and comprehensive consultation about your injury claim.