Forcing The Insurance Company To Settle With Time-Limited Settlement Demands

Our Atlanta, Georgia car wreck lawyers recently settled a case that’s a good example of how we use settlement demands with time limits to force insurance companies to settle cases.

We represented a nice lady who I’ll call Mrs. R who was injured in a car wreck on Interstate 20 in Douglas County, Georgia.  Mrs. R’s son was driving his car on Interstate 20, had run out of gas and was parked on the emergency lane.  Mrs. R brought her son gas and was in the emergency lane waiting to merge back onto the highway when another driver drove off the road into the emergency lane, crashing into the back of her car at high speed.  Mrs. R was taken by ambulance to a local hospital and was treated for injuries to her neck and back.  She continued to have neck and back problems and saw an orthopedist, who prescribed her physical therapy.  After several months of treatment she eventually recovered.  Her medical bills were a little more than $17,000.

The other driver had $30,000 in insurance with GEICO.  We sent GEICO a letter outlining the facts of the accident and Mrs. R’s injuries and medical treatment and demanding that they pay her the other driver’s $30,000 insurance policy limits.  We gave them 20 days to accept our demand.  Shortly after noon on the 20th day we got a fax from GEICO stating that it would pay Mrs. R the $30,000.

Time-limited settlement demands like this one put pressure on insurance companies to settle cases that they might ordinarily fight for months or years.

An insurance company is required to protect its insured (the person it issues the insurance policy to) and must use good faith in trying to settle lawsuits against its insured.  This responsibility includes accepting settlement demands with time limits like the one in our case.  If the insurance company does not accept a time-limited settlement demand and the case goes to trial and the jury returns a verdict higher than the insurance policy limits, the insurance company may have to pay the entire verdict.  However, sometimes you have to file a separate lawsuit against the insurance company to force it to pay the entire verdict (but that’s a topic for another blog post).   Time-limited settlement demands put pressure on the insurance company to accept the settlement demand in the time period set by the attorney for the injured person because of the threat to the insurance company of having to pay more than its insurance policy limits.

In our case, we gave GEICO the opportunity to settle Mrs. R’s case for its $30,000 policy limits and gave GEICO 20 days to accept our demand.  If GEICO had rejected our settlement demand or had not responded to it within 20 days, we would have gone to trial.  We believe the jury would have returned a verdict much higher than GEICO’s $30,000 insurance policy limits because of the seriousness of the collision, Mrs. R’s injuries and $17,000 in medical bills and her pain and suffering during her months of treatment and recovery.  In that case, GEICO would have to pay the entire verdict to Mrs. R because they rejected our offer to settle for its $30,000 policy limits.  The threat of having to pay Mrs. R more than its $30,000 policy limits forced GEICO to accept our settlement demand in the 20 days that we gave GEICO to respond.

Time-limited settlement demands are most effective in cases where a jury verdict is obviously going to be more than the insurance policy limits or there is a good chance that a jury verdict will be more than the insurance policy limits.  The greater the chance that the jury verdict will be more than the insurance policy limits, the more pressure on the insurance company to settle the case.  Time-limited settlement demands don’t work in cases where there is little possibility of a jury verdict exceeding the insurance policy limits.  For instance, if the at-fault driver in our case had a $1,000,000 GEICO insurance policy there would be no pressure on GEICO to accept our settlement demand because there is no chance a jury would ever return a verdict of more than $1,000,000.