When multiple parties are injured in an accident, the process of settling insurance claims can become complex. One term that often arises in such situations is a "global policy limits offer." This article aims to clarify what a global policy limits offer is, why insurance carriers prefer settling with all claimants simultaneously, the potential conflicts of interest that may arise, and how the involvement of different law firms representing injury claimants can impact the process.
What Is a Global Policy Limits Offer?
A global policy limits offer is a settlement proposal made by an insurance carrier to resolve all claims arising from a single incident by offering the total available policy limits. Essentially, the insurer is saying, "We are willing to pay out the maximum amount covered under the policy to settle all claims related to this event."
This approach is commonly used in situations where the total value of all claims exceeds the policy limits. By making a global offer, the insurer aims to distribute the available funds among all claimants, ideally avoiding further litigation and additional costs.
Why Insurance Carriers Settle Simultaneously and Policy Limits
Insurance policies have predefined limits that cap the amount the insurer will pay for a covered loss. These limits include:
Per-person limit: The maximum amount payable for bodily injury to a single person.
Per-accident limit: The maximum amount payable for bodily injury to all persons injured in a single accident.
Property damage limit: The maximum amount payable for property damage in a single incident.
For example, an auto liability policy might have limits of $100,000 per person and $300,000 per accident for bodily injury. If multiple claimants are injured, insurers aim to minimize financial exposure and simplify the resolution process by settling all claims at once. This helps ensure that the total payout remains within the policy limits, reduces legal expenses, and prevents potential bad faith claims for failing to resolve the matter within the policy's coverage.
Conflicts of Interest in Global Settlements
Although global settlements can be efficient, they can also create significant conflicts of interest. These conflicts may arise between claimants, the insured and the insurer, and even among legal representatives.
Claimant conflicts occur when the settlement funds are insufficient to fully compensate all parties. Disputes often emerge over how the funds should be divided, with claimants arguing that their injuries or losses are more severe than others'.
Insured vs. insurer: The insured party may face personal liability for amounts exceeding the policy limits if the settlement does not resolve all claims adequately. This risk highlights the importance of the insurer acting in good faith to avoid exposing the insured to further lawsuits.
Representation conflicts: When multiple attorneys represent different claimants, each lawyer has a duty to advocate solely for their client. This dynamic can create challenges in coordinating settlements or ensuring equitable distribution of the policy limits.
How Multiple Law Firms Impact the Process
When claimants are represented by different law firms, the settlement process often becomes more complicated. Each attorney negotiates independently, seeking the best outcome for their client. This can lead to unequal distributions of the available funds, as some claimants may receive more favorable settlements based on the quality of their legal representation rather than the actual severity of their injuries.
If no agreement is reached, claimants may file lawsuits individually, resulting in inconsistent judgments and the potential for the insured to face additional liability. On the other hand, some law firms collaborate to find a fair division of the policy limits, but this requires clear communication and compromise.
Protecting Your Interests in a Global Policy Limits Offer
If you are a claimant involved in a global settlement offer, it is crucial to protect your interests by taking these steps:
Consult an experienced attorney who can help you understand your rights and advise on the implications of accepting or rejecting the settlement.
Evaluate the offer carefully to ensure it provides reasonable compensation for your injuries and losses.
Understand the risks, including the potential for prolonged litigation if an agreement cannot be reached, and recognize that the insurer's policy limits may cap the total compensation available.
Conclusion
A global policy limits offer is a strategy insurance carriers use to resolve multiple claims efficiently when the policy limits are insufficient to fully compensate all claimants. While this approach can streamline the resolution process, it introduces complexities and potential conflicts of interest. By understanding the nuances of such offers and working with skilled legal counsel, claimants can navigate this process effectively and secure fair compensation.
CONTACT PHILLIPS & ASSOCIATES TODAY
Obtaining a settlement that adequately covers your immediate and future needs can be a challenging task, even when there's clear evidence of wrongdoing and negligence by the offending party. In such cases, an experienced attorney can provide crucial assistance in navigating the legal complexities involved. If you have been injured in an accident, contact Phillips & Associates at (818) 348-9515 for a free consultation today. We will work diligently and aggressively towards securing the best possible outcome in your case.
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