Insurance and Lawsuit question?

Question

there is a trucking company with a million dollar liability policy, and a car makes an illegal u-turn in front of this trucking company's truck. the trucking company and the driver are decided to 100% not at fault, but a lawsuit is filed against the trucking company regaurdless.

the lawsuit goes to mediation and it is decided that the lawyers and families of those killed will recieve the one million dollar insurance policy.

can the trucking company expect their insurance rates to go up, or possibly even be cancelled, even though it was decided that the accident wasn't the trucking company, or the driver's fault?

Answer 1

The trucking company got the shaft...yes it will go up and will be marked as a Claim....and a large one at that.

It's possible that due to the tragedy and loss that, they compensated through mediation agreement and there will not be a raise in rates......it is rare but sometimes insurance adjusters bend the rules like that from compassion.


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Answer 2

The only decision that counts with respect to who is a fault is the decision reached by a jury. While police accident report is useful, it is generally not admissible and usually tries to assess things in black and white. Most states have "comparative negligence" laws that allow assignment of even a small percentage of blame to be assigned to the trucking company.

When an insurance company decides to decides to settle a case at mediation, that have to look at a number factors that include the cost to defend the lawsuit, the chances of winning and the the chance that a verdict might exceed the policy limits. In some states, the failure by an insurance carrier to settle a claim within policy limits can man the carrier must pay all damages if the verdict exceeds the policy limits.

Answer 3

It obviously was not "decided" by anyone in authority that the trucking company was not at fault. If it had been, there would have been no lawsuit and no mediation.

The insurer only paid a nonbinding mediation recommendation because it feared that a judgment was likely and that its legal costs would be higher than $1 million.

If it paid the $1 million into court, say, it would still have to defend the trucking company or risk having to pay whatever damages were awarded, even more than $1 million.

Rates depend on the insurer's evaluation of future risk. It might well raise rates in this case; one can never tell. What has the firm's experience been? For a large trucking company a single claim, even of $1 million, is not an indication of risky behavior or risk of future losses.

Answer 4

Yes, but it will take a few years.

Commercial auto policies, including truckers, are "experience rated". This means, instead of surcharging for tickets and accidents like a personal auto policy, they look at five years claims history, and the "loss ratio" (claims paid vs. premium paid) and apply a "rating factor" to the straight rates.

If you have a clean claims history, the rating factor on a trucker can be as much as 40% off the book rates. If you have horrible claims, it can be two or three times book rates.

Now, it's POSSIBLE, if you stay with the same company, that the underwriter will have mercy on you, and apply an "irpm" (internal rate premium modification) factor to your rating, to help offset the payment of this claim. The trucking company's risk manager should be working closely with both the agent and the carrier's underwriter to acheive this.

But the bottom line on the claim is, a sympathetic jury wouldn't CARE who's fault the accident is - a mean old stingy trucking company is PROBABLY going to be found guilty, especially if you're talking about pretty young girls, or even worse, children, in the car. Add in the insurance company defense costs to their attorneys, and they probably figure they're getting off cheaper paying off the suit. Sad, but true.

So the bottom line answer to your question is, yes.

Answer 5

Yes, the rates can go up, or they might be cancelled. If the policy pays out, then someone decided that the trucking company was at fault to some degree. Otherwise, the policy would not pay out for anything but legal fees to win their defense. They obviously didn't win the defense, as the trucking co. was ordered to pay a settlement. In this case, money was paid out, and an underwriter can raise the rates or cancel the policy depending on the company rules.

Answer 6

Yes, absolutely.

The insurance underwriting will not likely look at fault and whether there was any fault or negligence, it will look at past history of losses and a $1-million judgment is a loss regardless of what was at fault.

And you are hitting on a key point.....the fact that an accident was zero percent the fault of a deep pocketed driver does not mean the plaintiff's attorney will not sue. In fact, fault means nothing when deep pockets are involved. They'll sue anybody, anytime, anywhere, fault be damned.

Answer 7

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