Injury Lawyer Insurance Claims & Settlements 1 — Questions and Answers
Question 1: What is 'liability coverage' in auto insurance as it relates to injury claims?
- Coverage that pays the policyholder's own medical bills
- Coverage that pays damages to third parties injured by the policyholder's negligence (Correct answer)
- Coverage for the policyholder's vehicle repairs
- Coverage for uninsured drivers
Correct answer: Coverage that pays damages to third parties injured by the policyholder's negligence
Liability coverage pays for bodily injury and property damage the policyholder causes to others, which is the primary source of compensation in auto accident injury claims.
Question 2: What is 'uninsured motorist' (UM) coverage?
- Coverage for the policyholder when hit by a driver with no insurance (Correct answer)
- Coverage for vehicles that are not registered
- Coverage for accidents on private property
- Coverage for commercial vehicles
Correct answer: Coverage for the policyholder when hit by a driver with no insurance
UM coverage protects the policyholder and passengers when injured by a driver who has no liability insurance or is a hit-and-run driver.
Question 3: What does 'bad faith' mean when an insurer handles a personal injury claim?
- The insurer denies a claim without review
- Unreasonable refusal to pay a valid claim or failure to conduct a proper investigation (Correct answer)
- The insurer delays payment by one week
- The insurer requests additional documentation
Correct answer: Unreasonable refusal to pay a valid claim or failure to conduct a proper investigation
Insurance bad faith involves an insurer's unreasonable denial or delay of a valid claim, failure to investigate, or refusal to settle within policy limits without justification.
Question 4: What is a 'policy limits' demand in personal injury settlement negotiations?
- A demand that the insurer change the policy terms
- A settlement demand equal to the full amount of the defendant's insurance coverage (Correct answer)
- A demand for punitive damages only
- A demand for immediate payment without documentation
Correct answer: A settlement demand equal to the full amount of the defendant's insurance coverage
A policy limits demand requests the full amount of the defendant's available insurance coverage, often used when damages clearly exceed or approach the policy limit.
Question 5: What is 'underinsured motorist' (UIM) coverage?
- Coverage when the at-fault driver's insurance is insufficient to cover all damages (Correct answer)
- Coverage for drivers under age 25
- Coverage for vehicles worth less than $10,000
- Coverage for accidents in foreign countries
Correct answer: Coverage when the at-fault driver's insurance is insufficient to cover all damages
UIM coverage applies when the at-fault driver has insurance but the coverage limits are too low to fully compensate the injured plaintiff.
Question 6: What is a 'reservation of rights' letter from an insurer?
- A letter offering a settlement
- A letter notifying the insured that the insurer is investigating while reserving the right to deny coverage (Correct answer)
- A letter demanding additional premiums
- A letter granting full coverage for the claim
Correct answer: A letter notifying the insured that the insurer is investigating while reserving the right to deny coverage
A reservation of rights letter informs the insured that the insurer will investigate and defend the claim but reserves the right to deny coverage if facts emerge supporting a policy exclusion.
Injury Lawyer Insurance Claims & Settlements 1
What is 'liability coverage' in auto insurance as it relates to injury claims?