There are several insurance coverages that may come into play in your case: Depending on the facts of your case, you may be making claims under your own insurance policy, making claims against another driver who is covered by insurance, or both. Claims that you make against your own policy are generally referred to as “first party” claims. First party claims include situations where you are an “insured” under the terms of policy and a premium was paid for the benefit. These claims can be contrasted with “third party” claims. Third party claims are where you are making a claim against someone for their negligence, and that person has an insurance policy that provides indemnification and payment for their liability. You are not insured under the other person’s policy, so it is a third party claim.
Insurance companies on first party claims owe you a duty of good faith and fair dealing. This means that they must investigate the claim before refusing to pay and must make reasonable efforts to resolve claims based on the facts of their investigation. Also, the Insurance Fair Conduct Act may create additional legal relief if your own insurance company violates the Washington State Insurance Commissioner’s rules and regulations for handling claims.
When handling third party claims, insurance companies owe no duty of good faith or fair dealing to you. They only owe a duty to their insured -- not to you. Thus, they can take any position they want that is consistent with their duties to their own insured. On liability claims, this means that they can tell you that they will pay little or nothing to settle your claims, even if there is clear evidence of liability and damages.
Collision coverage is an optional first party coverage that you can purchase on your own policy. It will pay for damage to your vehicle as a result of a collision. Benefits under this coverage are payable regardless of fault. Even if you just ran into a telephone pole, you can still make collision claim. There is usually a deductible that you must pay. If another driver was at fault and you make a claim under your own collision coverage, your insurer will typically try to recover your deductible for you.
Towing coverage and rental car coverages are additional optional coverages that will cover costs associated with a collision. Benefits under these coverages are payable regardless of fault.
If the other driver was negligent or at fault for causing the collision, the other driver’s insurance policy provides coverage for property damage liability. State minimum limits for liability property damage is $10,000.00, and every insurance policy has this coverage. Most policies have higher limits. This coverage only pays for the other driver’s liability for property damage.
If the other driver was liable and had no insurance or insufficient limits to cover your property damage, then you may make use of your own policy’s optional coverage for UIM-PD or underinsured motorist property damage. This insurance coverage “stands in the shoes” of the other driver. If (1) the other driver was at fault, (2) he had only $10,000.00 of property damage liability coverage, and (3) your vehicle was worth $12,000.00, then you could make a claim for $2,000.00 under your UIM-PD coverage.
If the other driver was at fault, and your property damage was paid for by your own insurance, then your insurance company will assert a subrogated interest against the other driver’s insurance. This means that your own insurance will collect from the other guy’s insurance. In the process, your insurance will try to obtain your deductible and mail you a check.
I typically do not get involved in handling property damage claims. The main reason is that I cannot add much value by working on the claim (exception is with some rare or collectible cars). If your car can be repaired, I generally recommend that you have a shop of your choosing look at the damage and give you an independent estimate of repairs. Ideally, this is a shop that wants your business and will be getting paid for doing the work. Thus, they have an incentive to fix all damage done to the car. I generally recommend that people go through their own collision coverage rather than deal with the other driver’s insurance. I think things generally go more smoothly. Going through your own insurance requires you to pay a deductible, but if the other driver is at fault, then you should get this back. Insurance companies are usually pretty good about reimbursing deductibles in a timely manner.
If your car is totaled, insurance companies use a service that collects statistical data on car sales to value vehicles. These companies cater to the insurance industry and produce low-ball figures. Insurance companies do not use Blue Book, which typically has a higher value. If you disagree with their number, I would suggest looking in the newspaper or Auto Trader to find comparable vehicles to yours. You can also provide receipts for recent work that you had done to your car, custom parts, or other specifics that would help increase the value. My recommendation is that you put together the best documentation that you can, for the highest value you can reasonably support, then demand more money from the insurer three times. After the third time, unless they are still wildly undervaluing your vehicle, you should try to resolve the claim. The cost of fighting the value is typically higher than the increase you would achieve by litigating the matter. If after demanding more than three times, you still think that the insurer is way off, then litigation may be necessary.
Personal injury protection (PIP) coverage is a first party coverage. Every policy in Washington has PIP unless the insurance company obtained a written, signed waiver of coverage. PIP covers (1) persons named in the policy, (2) minor family members of the household, (3) passengers in an insured vehicle, and (4) pedestrians that are struck by an insured vehicle. PIP benefits are payable regardless of whom was at fault for causing the collision. PIP covers four things:
If your insurance pays PIP benefits and the other driver was at fault, then it will assert a right of reimbursement in the amount that it paid against the proceeds from any recovery from the other driver. There are three important legal rules related to subrogation.
First, under a case called Thiringer, the injured persons must be made whole by all recovery from all sources before the injured person has to start paying back insurance companies (reimbursement). For example, assume that a person was injured in an amount of $60,000.00 (leaving aside for the moment how we arrive at this figure) if you consider their medical bills, wage loss, pain, suffering, inconvenience, disability, loss of activity, loss of enjoyment of life, disfigurement, and other losses. If the PIP paid $10,000.00 in medical bills, the PIP paid $5,000.00 in lost wages, health insurance paid $5,000.00 in medical bills, and third party liability paid $50,000.00 (for a total from all sources of $70,000.00), then the most that could be subject to reimbursement is $10,000.00. Thus, the injured person is not entitled to recover more than his or her full damages. The excess or double payments are subject to reimbursement.
Second, under three cases called Mahler, Winters, and Hamm, because you had to hire a lawyer and incur attorneys fees to collect the money that is being used to repay your PIP carrier, your PIP carrier must pick up a pro rata share of the fees and costs incurred in obtaining the recovery. For example, if (1) your PIP carrier paid $5,000.00 in benefits, (2) you settled your case with the liable party for $15,000.00, (3) your attorneys fees were $5,000.00, and (4) your costs were $1,000.00, then your PIP carrier would have to pick up its share ($5,000 divided by $15,000 or 1/3) of the attorneys fees and costs ($6,000). Thus, it would reduce its interest by $2,000. You would have to repay them, at most, $3,000.00.
Third, under a case called Sherry, if you are partially at fault for causing the collision, and the other driver is partially at fault for causing the collision, you are entitled to be fully compensate for all your damages before PIP gets repaid. For example, if liability is 50% to you and 50% to the other driver, and your total damages are $20,000.00, then you are legally entitled to collect $10,000.00 from the other driver. If PIP paid $10,000.00 and you recover $10,000.00 from the other driver, you do not have to repay PIP since you collected no more than your total damages.
What is an IME?
PIP policies have provisions that allow insurance companies to ask for an “independent medical examination” or IME. An IME is usually triggered because (1) you have been treating for a certain length of time, (2) your treatment has surpassed a set dollar amount, (3) your PIP carrier has seen reference to a pre-existing medical conditions or a post-collision injury, (4) you have discontinuity of care (a gap in treatment, for example), or (5) an adjuster feels that there is some reason that your care is unreasonable, unnecessary, or not related to the collision. Your insurance will not ask for an IME because it is curious about your care. These examinations are expensive. They will typically ask for an IME because they are trying to cut off your benefits. For this reason, IMEs are routinely referred to as “insurance medical examinations” or “PIP termination examinations” among claimant’s lawyers.
State law requires that an IME doctor must be the same type of doctor as the treatment provider. Thus, your chiropractic care cannot be cut off by a medical doctor, or vice versa. If you saw more than one type of doctor, then you may have more than one IME doctor assigned to your IME.
At the IME, the examiner will take a detailed medical history. This usually lasts for about 30- 50 minutes. The doctor will ask about the facts of the collision, your symptoms, your treatments, changes in your symptoms, pre-existing conditions, post-collision injuries, and general medical history. The doctor will then do a medical examination. This typically lasts for between 5-15 minutes. The doctor will perform basic orthopedic and neurological tests. These include such things as testing reflexes, testing muscle strength, testing sensation, measuring ranges of motion, measuring anatomy (leg lengths, muscle circumference), palpation of injured areas, and standard orthopedic testing (walking on heels, walking on toes, tandem walking, balancing on one leg, cervical compression, etc.)
There are some doctors that regularly perform IMEs. These “usual suspects” get repeat business from insurance companies because insurance companies like their reports -- they routinely cut off treatment.
I typically attend IMEs with my clients. It is kind of a scary procedure – having a doctor that you do not know and did not choose poke around at you – so I want to be there by your side. Also, observing the history and examination allows me to take good notes if new information comes up and allows me to look for shortcuts taken by the examiner.
If your PIP benefits are terminated, your policy has a provision for dispute resolution. In most policies, disputes are subject to arbitration. An arbitration is like a court proceeding except
that the decision maker is a lawyer or retired judge, the proceeding occurs in an office, and the methods of presenting evidence are somewhat expanded compared to a court trial. Your insurance company must pay the costs associated with the arbitrator. You must pay for the costs associated with presenting your case (the cost of expert witness testimony and attorneys fees and costs). In making a determination of whether or not to pursue a PIP arbitration, I look at several factors including (1) the amount of benefits that are in dispute, (2) the relative strength of the cases that would be put on by you and by your insurance, (3) the costs associated with presenting your case, and (4) the time and energy that would be associated with the arbitration.
If your treatment is cut off by an IME and it is not economically viable to pursue a PIP arbitration, then I will still try to collect your damages from the liable party under their third party liability coverage. Ultimately, it is easier to collect your damages when the PIP carrier has fully paid under your PIP coverage.
If the other driver was at fault for causing the collision, you have a claim against the other driver for your damages. If that driver was insured, then his insurance company will defend him and try to negotiate a settlement of the case.
Unlike PIP coverage that is limited to four specific categories, liability coverage pays for all amounts of damages that are recoverable under the law including such things are (1) charges for reasonable and necessary health care related to the collision, (2) lost wages, lost earning capacity, or economic losses, (3) out of pocket expense related to the collision, (4) pain, (5) suffering, (6) disfigurement, (7) loss of enjoyment of life and loss of activity, (8) temporary or permanent disability, (9) shortening of life expectancy, and (10) loss of consortium.
In Washington, all drivers are required to have liability coverage for bodily injuries of $25,000 per person up to $50,000.00 per collision. Most drivers carry higher limits. Your rights against the other driver are not dependent on the amount of insurance carried by the other driver; however, your ability to collect on any judgment that you obtain may as a practical matter be constrained by the amount of insurance available.
If the other driver was uninsured or had less liability insurance than your total damages, then you can make a first party claim for Underinsured Motorist Coverage (UIM) under your own policy. All policies in Washington have UIM coverage unless your insurance company obtained a written, signed waiver of coverage. UIM coverage extends to named insureds on the policy, minors residing in the insured household, and passengers in an insured vehicle.
Your policy defines the policy limits for UIM coverage. Most policies set the UIM limit and your own liability limits at the same amount. UIM coverage “stands in the shoes” of the other driver and pays for whatever damages the other drivers insurance would have paid had he had insurance or more insurance. Thus, you can recover whatever damages you could legally obtain from the other driver.
Like PIP coverage, your policy probably contains language that allows the UIM carrier to ask for an IME (see above). Your policy also contains dispute resolution provisions if the parties cannot agree on the amount of UIM benefits. Depending on the policy, the dispute may be subject to arbitration or may allow either party to opt for a jury trial.
PIP coverage is the primary coverage for medical treatments related to health care expenses. If you waived PIP, did not have a policy of auto insurance, your PIP limits were exhausted, or your PIP benefits were terminated after an IME, then secondary sources of insurance may pay for your health care. This includes everything from health insurance, union health care trusts, Labor and Industries (if you were working when a car accident occurred), Medicare, DSHS (also know as medical coupons or Molina Health Care), Veteran’s Administration, CHAMPUS or CHAMPVA (active duty military), or other insurance or governmental programs. These insurances are secondary. They will want to see verification that PIP has been exhausted or terminated before paying benefits.
After many motor vehicle collisions, some of the medical bills were paid by health insurance even though PIP is primary. Sometimes the health insurer does not catch this and nothing ever happens. Sometimes they send out “Accident Information Forms” to be completed. This is the health insurers way of determining whether it is the primary or secondary insurance, whether it should assert a subrogated (reimbursement) interest, and for what conditions it can assert an interest. For example, if you hurt your back in a collision and had a pre-existing knee injury, then your health insurance can only assert a subrogation interest related to back treatments -- not knee treatments.
If they pay benefits, they will assert subrogation or statutory rights of reimbursement against any recovery that you make from the liable party.
The law requires that you take reasonable steps to mitigate your damages. This requires you to take reasonable steps to minimize your damages. The key to understanding this is that you must act reasonably. Here are some examples:
If you take reasonable steps to minimize your losses, the odds that you will be satisfied with the resolution of your claim will be greatly increased.
There are two main methods of resolving legal claims: settlement and litigation. Settlement involves all parties coming to a mutually acceptable agreement. Settlement is a voluntary process that requires everyone’s participation and agreement. Litigation does not require participation or agreement. Instead each party has an opportunity to present their side of the story through witnesses and evidence, and then a neutral body (judge, jury, or arbitration) makes a decision as to what is fair. Settlement is preferable, but sometimes litigation is necessary because the other party has no interest in being fair or participating in meaningful settlement discussions.
The main advantages of trying to settle a case include less costs for the client and less investment of time and energy for the client. Attempting settlement first is usually best for clients who do not have catastrophic injuries, who are hiring me primarily for convenience and my experience, and who would prefer to resolve their cases with a smaller investment of time and energy in the process. Unfortunately, some insurance companies have adopted a business plan that they do not make fair attempts to resolve claims for fair compensation by offering substantially less than a case would be worth in litigation.
Litigation involves some additional investment of time, energy, and costs. I typically do not recommend litigation unless there are good reasons to believe that litigation will be substantially more productive than settlement.
For most counties, claims under $50,000.00 go through a process of mandatory arbitration. In this process, the case is first presented to a lawyer or retired judge, then either side can appeal the decision to a jury trial. There is increased flexibility for presenting evidence -- witnesses can testify via sworn declaration, by telephone, or in person. Much of the documentary evidence supporting your claim can be admitted without calling witnesses. There is a serious disincentive for appealing the decision from mandatory arbitration. If either party appeals and does not improve its position at trial, then that party must pay the other party’s attorneys’ fees and costs incurred after the arbitration. A non-appealing party bears no such risk. So, for example, assume that a case goes through mandatory arbitration and the arbitrator issues a decision that the at fault party must pay compensation of $20,000.00. Assume that the insurer for the at fault party appeals to a jury trial. If the jury returns a verdict of $21,000, then the insurer must pay $21,000, plus attorney fees and costs and expert witness fees for the jury trial. If the jury returned a verdict of $19,000 and you did not appeal, then you would receive $19,000 and not have to pay the insurance company’s attorney fees.
For cases over $50,000, the case goes directly to a jury trial.
Once a lawsuit is filed, the defense will almost without fail want to engage in the following pre-trial discovery:
In addition, you will have to invest some time and energy into preparing for the arbitration or trial. This involves such things as helping with disclosures of witnesses and working on your presentation at arbitration or trial. You may need to participate in formulating the basis for motions that we make or responses to motions that the defense makes.
The filing fee for a lawsuit in Superior Court is $230.00. The mandatory arbitration fee is $220.00. Service of process on the defendant can range from $10 to $250 or more depending on the complexities of service. You have to pay for any depositions that we take (like of the defense’s examining doctor) and for any transcripts that we order. You have to pay for obtaining copies of your medical records, which can be quite expensive. There are typically photocopying, mailing, and messenger charges. The biggest single cost associated with trial is the cost of obtaining testimony from treating health care providers.
If your case goes to a jury trial, these are the generally steps involved:
Mandatory arbitration applies to cases where either (1) the damages sought are under $50,000.00 or (2) the damages sought are in excess of $50,000.00, but in order to resolve the case more quickly and with less expense you are willing to accept $50,000.00 or less. When my office files a lawsuit that is going to be placed in Mandatory Arbitration, this fact is disclosed in the initial Complaint that is filed with the Court.
Cases in Mandatory Arbitration are tried before an arbitrator. Arbitrators are randomly selected from a list maintained by the court. The list is comprised of practicing lawyers and retired judges.
Cases in Mandatory Arbitration have streamlined procedures that limit the activity before the arbitration hearing. Typically your involvement is limited to three activities:
The arbitrator issues a ruling within 14 days. Either party can appeal the decision of the arbitrator to a jury trial. However, there is a severe potential penalty associated with doing so. If the person appealing does not improve the result, then they owe the other party’s attorneys fees and costs incurred after the arbitration. As a result, my clients have NEVER appealed an arbitration result. Some insurance companies appeal on a routine basis, but this leaves them open to potentially greater liability and opens up the possibility that increased costs and attorneys fees are paid by the insurance company.