Several months ago, a friend of mine called.  Tom, not his real name, and his buddy had traveled to San Antonio for a guy’s trip a couple of weekends earlier.  Tom drove through a construction zone where there was a lane shift followed by a traffic light.  Based on the location of the light, he mistakenly thought he was supposed to stop about 40 yards away.  He ended up passing through the intersection and was struck by a car that had a green light.  It was his fault.

Tom took it pretty hard that the accident was his fault; he’d not been in one in over five years.  What made matters worse was he and his buddy were injured in the accident.  Luckily no one in the car that hit them was hurt.  Tom called me because he had a question regarding a certified letter he received from his insurance company about his claim and he wanted to confirm what it meant.

What caught Tom’s attention was the information contained in the first 3 paragraphs:

  • The value of his buddy’s medical claim was most likely going to exceed the liability limits on his policy.
  • The letter concluded with the statement if Tom were sued by his buddy, he could be personally liable for any amount over $30,000.

Tom was pretty concerned.  Even though he was not my client at the time, we went through each paragraph and outlined what was being communicated, why the letter was written, and outlined a plan of action.

An insurance claim letter like this is designed to communicate two information points.  The first point is to remind the client of their policy limits.  In Tom’s case, his limits at the time of the accident were 30/60/25.  The first number is the total amount the insurance company will pay for any one person’s medical care.  If more than one person required medical care, then the second number specifies the total amount the insurance company will pay for medical care, although no person will receive more than the first amount listed.

The medical bills for Tom’s friend were going to exceed the maximum amount of coverage on his policy.  This brings us to the second point for the letter: if Tom’s friend were to sue him, his insurance company would write a check for $30,000 but he’d be potentially liable for any amount above that.

It was now my turn to ask Tom two questions:

  • Did his friend have medical insurance through his employer?
  • Did he anticipate his friend would sue him?

The good news for Tom is his friend had excellent health insurance that would fully cover the amount of the claim above the limits on Tom’s car insurance policy.  He also felt this friend would not sue him.  My suggestion was to share his letter with his friend and confirm their medical insurance would be sufficient.

Tom’s friend was grateful he shared the letter with him and confirmed he had no intention to sue.  Tom called me the next day.  He sounded completely different from our earlier conversation.  His friend had assured him there would be no lawsuit.  A huge burden was lifted off Tom’s shoulders.

Tom moved his insurance to me when it was up for renewal.  He also has higher limits than he did before.  He was fortunate to have not been sued.  Had that happened, he would have been on the hook for all the legal fees to defend himself and could have been compelled to pay additional money for his friend’s medical care.  His experience is a great reminder of the importance of carrying appropriate limits that are able to cover an unforeseen accident like this and protect him financially in the event of a lawsuit.

What have you experienced?  Share your experience, comments, and questions with us in the comments section of our blog or on our Facebook and Google + pages.  We’ll all learn something from each other.

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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