02 Oct 2007
Insurers fight punitive payouts law

I am not a big fan of the whole "punitive damages" concept that has crept into our civil courts over the years, but I may make an exception here, and this is why.

When my former mother-in-law was killing in a auto accident that was clearly the fault of a dump truck driver, the trucking companies insurer refused to pay the claim: they had a $1 million liability policy for causing death. So her spouse hired a lawyer and went to court, and was awarded the claim after a session that lasted less than 5 minutes. However, it took better than a year and a half to get into the local court system, and his lawyer took better than 35% of the award (which was the policy amount). It cost the insurer exactly nothing to prolong this settlement. In fact, they had the use of the settlement money for a year, at interest, for free. It did, however, cost their client, the trucking company, a good deal in attorney fees (as they were obviously sued, too) and reputation, and cost the victim (my former father in law) both time and a large chunk of cash.

This law seems to me to be an incentive for insurers to pay legitimate claims in a timely fashion - an incentive that's lacking in our present system.

Across the country, insurance companies, trial lawyers and legislators are closely watching a November referendum in the state of Washington that could change how insurers are required to treat their customers.

(link) [CNN.com]

07:07 /Politics | 0 comments | permanent link