California Personal Injury and Insurance Blog

Liability Coverage and Damage to Property of Others - What is the Difference?

Someone asked me why they have $300,000 in liability coverage when they also have $1,000 in coverage for damage to property of others. Good question that requires a long answer, which I will now make short.

Liability coverage, or coverage E, provides that the insurance company will pay money you become legally obligated to pay as a result of causing injury or property damage to another. Huh? Okay, so if you hurt someone or damage their property, they are going to pay the injured person. For example, your dog bites someone? It is coverage E that pays it. Or, lets say you invite someone over and they fall into that hole in your backyard that you forgot to tell them about. Coverage E pays the damage.

The other coverage, damage to property of others, pays up to $1,000 (sometimes $500) when someone's property is damaged and you damaged it. So, you are throwing a baseball in the front yard and it gets over your 10 year old's head and hits a car windshield. You may not be legally liable, but you may want to be a good neighbor. This coverage will pay for that damage.

So, Coverage E pays for property damage or personal injury if you are legally liable. Damage to property of others pays only for property damage regardless of fault.

Clear? Don't worry if it is not. There are a lot of agents  and adjusters who do not understand the difference either.

Tips for Northern Californians Facing Floods

It is another day of rain here in Northern California and it is not expected to get better any time soon. With that, comes the rivers getting higher. And that brings flooding. The river levels are the highest they have been in 7 years. Because of this, I bring you tips for floods:

-- Learn how your community notifies residents of impending floods and listen for alerts and warnings.

-- Make sure your family has a well-stocked emergency supply kit, including flashlights, a portable radio, batteries, food, first aid supplies and plenty of clean drinking water.

-- Formulate an emergency communication plan for your family. Select a meeting location in a safe area away from the home in case family members are separated. Designate an out-of-town relative or friend as an emergency contact and make sure everyone in the family has the phone number.

-- Learn how to shut off gas, electricity and water to your home in case you are instructed to do so by authorities.

-- Listen closely to announcements from emergency management officials and obey all evacuation orders.

-- Prepare to evacuate by assembling your emergency kit (remembering to include essential medications, cash and credit cards, and critical financial documents), reviewing the family evacuation and communications plan, and ensuring your vehicle's gas tank is full.

-- If instructed to do so by authorities, shut off gas, water and/or electricity to your home.

-- If time allows, move outdoor possessions like bicycles and patio furniture indoors and elevate valuable furnishings and possessions to upper floors or higher ground.

-- If advised to evacuate, do so immediately following the instructions given by authorities.

-- Do not attempt to drive through flooded roads. More people drown in their cars than anywhere else during floods.

-- Do not walk through floodwater. In many cases, people underestimate the power of even a small amount of moving water. Be especially careful with children.

Be safe if the water is coming up in your area.

Good News for Sony BMG Music Purchasers

If you are like most people, you probably bought a Sony BMG CD and didn't even realize that there was a problem with it. Well, there was. If you copied the CD onto your computer, you also had to copy this really bad software program. I don't mean bad as in good, but bad as in, it may have exposed your computer to potential virii. OOPS!

Well, Sony was sued. And it looks like a settlement may have been reached. The Washington Post is reporting that a proposed settlement was reached, but it is awaiting court approval. (For the record, court approval is required in class action lawsuits like this one.) The settlement may include cash, replacement CDs and free downloads. Not a bad deal for consumers.

Hopefully Sony and the other CD labels have learned from this. It is not the end of Sony's problems, but it may help consumers who bought Sony CDs without realizing the problems!

Increased Insurance Rates and Increased Insurer Profits!

After the hurricanes, everyone expected insurance rates to go up. And they will go up, especially for people in the Gulf coast region. But how much they will go up depends on where you live.

Reuters has a new report out that indicates that rates will go up the most in the Gulf coast. However, due to the profits that insurance companies are making (which we will discuss in a minute), there are more people entering the insurance market.  Most people will not see hikes over 20 percent - which is a good thing. The moral here: when your policy is up for renewal, it may pay to shop around.

Now, about those insurance company profits. Through the first 9 months of 2005, insurance company profits were up 4.4 percent to $28.8 BILLION. Yes, that is after the hurricanes hit. Yes, claims were being paid already - well, some were. Some insurance companies were still arguing over whether the damage was covered. But, insurance company profits ROSE and they are still going to raise your rates next year.

Make sure you wish your insurance company a HAPPY NEW YEAR - it will be prosperous for them.

New Laws for 2006

The Auto Club was nice enough to put out a list of laws that will change in 2006 and effect motorists.  Some highlights:

• Street racing will get you a minimum of 30 days in jail.
• A DUI will effect your insurance for 10 years, instead of 7.
• Getting pulled over on a second DUI can result in your car being impounded.
• Pocket bikes, which I hate, may be seized for up to 48 hours by police.
• The new driver's license law for teens will be strengthened. Because this is such an in depth change, I think you should go to the DMV website and read the changes. It will have a big impact on teen drivers.

As the new year approaches, be safe. Also, make sure you are familiar with these new laws.

Malpractice Insurers Overestimated Losses

We constantly hear about a medical malpractice insurance crisis in this country. The insurance companies consistently complain about not making enough money. They have to raise doctors premiums because the system is out of control. Doctors get upset because their premiums keep going up and they blame lawyers. What a mess!

Well, as it turns out, my theory has been right: insurance companies are not being fully honest in this debate. The nonpartisan Foundation for Taxpayer and Consumer Rights has just released a study that shows that medical malpractice carriers are overestimating their losses. And guess what? In bad economic times, they increase this practice. 

Why do they do that? In bad economic times, insurance companies are not making as much money from investments. So, in order to increase profits, they have to increase premiums. But, in most states, they cannot increase premiums without approval. That approval only comes if they can show increased losses. So, they increase their losses to get a rate increase so that they can make more money.

I do not think I am asking for much, but how about a little honesty from the insurance companies?

Contingent Fee Caps Do Not Create Reform

There is a lot of talk among the "tort reform" people about placing caps on contingency fees. The idea is simple. If you limit the amount that an attorney can collect, they will not take as many cases and you will limit the number of cases filed in court. Thus, you "reform" the system.

This is wrong for so many reasons. However, instead of telling you my own reasons, I will share with the findings from the "American Enterprise Institute," a conservative organization. Two economists, Prof. Alexnader Tabarrok of George Mason University and Prof. Eric Helland of Claremont McKenna College analyzed closed cases from 16 states. They had 4 major conclusions:

• Contingent fees give lawyers incentive to screen cases and weed out "frivolous" cases;
• Contingent fees motivate lawyers to win;
• Contingent fees improve acces to the courts for low income plaintiffs;
• Contingent fees help spread risk because a contingent fee lawyer is a venture capitalist of torts who takes significant risks, puts up funds, and brings needed expertise to the case.

There you have it. Contingency fees are good, from the tort reform group.  I know some people will argue with this, and those of you who read this who believe in tort reform, let me know your comments.

However, the next time you hear that we need to ban contingency fees, refer someone to this study.

Insurers controlling health care?

After all of my time in insurance and personal injury work, I thought I had seen it all. Then, out of the UK comes this story.

It appears that a UK insurer now runs its own medical clinic. They will treat their own policyholders as well as people who are injured as a result of their policyholders negligence. (This second group of people are called claimants.) Their admitted purpose is to reduce payments, reduce litigation and reduce costs. They claim that they can treat people faster and get them better faster. Since I am not an expert on UK medical treatment, I cannot evaluate this claim. Maybe my friend Mark Gibson, an attorney in the San Francisco area who is from England, will stop by and comment on that.

But, for a minute, we can pretend that they will treat people faster. Getting medical care quickly can help you recover more quickly. I agree with that. But, there are some interesting issues that come up here. I will address them in the order I thought of them:

1. What happens if you still have to file a lawsuit? Your treating doctor is now being paid by the defendant's insurance company. That does not sound good.
2. What happens if you need a referral? They are only treating soft tissue cases right now, but some cases that start out as soft tissue turn into more serious injuries. What happens then?
3. What happens if they will not give you the treatment you need? You now face a longer delay in getting in to your regular doctor.
4. Are they putting cost savings ahead of treating injured people? This could cause some serious ethical concerns.

I am all in favor of getting people quick, necessary treatment. But when the insurance company starts to try to dictate that treatment, serious questions need to be asked. This is something we should keep our eyes on.

Are you Ready.gov?

This is a bit off topic, but, since it is my blog, don't I get to decide what is on and off topic?

The US Dept of Homeland Security put out a website at www.ready.gov. Now, normally I put some fancy words there and you click on it and it brings you to the website. Tonight, I wrote out the website because I think that everyone should know this address.

At this site, you can find the threat advisory (which I still do not understand), information for your business, information for your family, and coming soon, information for your kids. This is one of the websites that you MUST bookmark.

Some Insurance Humor

I may be the only one who finds this website funny, but anyone who has spent time in the insurance business will tell you that these things happen. I don't know why people say these things, all I know is that they do.

Some tidbits from the website:

Q: Could either driver have done anything to avoid the accident?
A: Travelled by bus?

I didn't think the speed limit applied after midnight.

To avoid hitting the bumper of the car in front I hit a pedestrian.

It is amazing how many times adjusters are told things like this. At my first job in claims, we would print out these funny sayings and keep them in a book. When things got rough, it was always worth a good chuckle.

If you have any funny stories like this, I would love to hear them.