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Monday, January 07, 2008

No-Fault and Liability

I'd like to preface this installment with the following disclaimer:

I am citing mainly Minnesota Law. There are several states that are known as "No-Fault" states. Those states that do not have "No-Fault" are "Tort" states and so are subject to differences in how this is handled. If you live in a "No-Fault" state, then most of what I'll be saying applies.

NO-FAULT

Somewhere in my first year on the job, when I was still a Generalist, I handled a very simple claim: Car A rear-ended Car B. We insured Car A, and as liability was clear, I contacted the other parties and we got their car into the shop for repairs, paid for a rental, all up front.

The damage to their car was minimal, but the passengers reported some stiffness and one party did visit the doctor. So, per company policy, I went out to meet with the parents (one of them was the injured party) and discuss Minnesota's No Fault law and how injuries are handled.

Raise your hand if you've ever heard someone say with regard to an accident, "No one is at fault...this is a "no fault" state." Raise your OTHER hand if the person you heard that from was a cop.

Seriously, the police in this state need to be educated on this very simple fact. And so does everyone else, so listen closely:

The term "no fault" has NOTHING to do with liability. Typically in an accident, SOMEONE is at fault in an accident. And what always amazed me was that even after I had written a check to someone, that person would be saying something about "no fault" and "he's not going to pay because this is a "no fault" state."

OK, seriously, then, why are we talking and what insurance company is listed on that check in your hot little hand?

And that was the situation during the claim that I mentioned. As soon as I sat down with the customers to discuss their injury claim and mentioned "No-fault", the guy ducked his head, clasped his hands together and said in a low, gruff voice, "I'm just telling you right now, I'm going to FIGHT THIS!"

I took a deep breath. He wouldn't make eye contact with me, so I mildly told him that he had nothing to fight. I pointed out that there was a rental in their driveway and I was paying the bill. And would pay the bill on the accident-related repairs. It was a done deal. What was he fighting?

He finally looked up after that.

This is very simple, actually. "No-fault" simply means that, if you are involved in an accident AND you are injured, you MUST go trough your OWN insurance company to cover your MEDICAL expenses. You're paying premium on that, and utilizing the benefits DOES NOT affect your insurance rates. EVEN IF you're a PASSENGER in someone else's car and you're injured, regardless of who is at fault in the accident, you MUST call your own insurance company and report an injury-only claim.

No-fault, then, applies ONLY to injuries.

Now, if you are driving someone else's car or you are a passenger in that car, and you don't have your own car/insurance, then the car you are in will cover your medical bills. Again, this is no detriment to the policyholder. This is Minnesota State Law, and the law was designed to protect people.

There's more to say about injury claims, but it's best to discuss liability first.

LIABILITY

Liability basically means "negligent". There is always a question; who is negligent in a given loss?

What if you spin out on icy roads and hit the guard rail? Well, it's car vs. immovable object. YOU'RE at fault for driving too fast and failing to maintain control. Don't argue about the fact it's icy....in that same area, while you sat there stuck to the mangled rail, waiting for a tow truck, countless cars passed you safely, didn't they? Without crashing.

OK, what if a deer jumps out in front of you and ends up bashing into your fender?

You are NOT at fault (unless you happen to be a Foxworthy-type redneck and you were in the ditch HUNTING the deer using your car as a weapon). Seriously, deer hits are handled under comprehensive coverage, not collision, and there is no liability to you.

In the event of more than one vehicle, often liability (who is negligent) is very clear; such as when a car is stopped at a red light and another car fails to stop, resulting in a rear-end collision.

Intersection accidents can be trickier; if coming from opposing directions, SOMEONE had a red light or a stop sign, or in the event of an uncontrolled intersection, someone didn't yield in accordance with the law.

Yes, there are laws that govern uncontrolled intersections.

Anyway, now I must introduce another term, which applies under Minnesota State Law:

COMPARATIVE NEGLIGENCE

This means that BOTH or ALL drivers can SHARE in the cause of the accident. Keep in mind... "comp neg" doesn't always apply. But sometimes it does. Take the example of an intersection accident, especially if it is uncontrolled. Both drivers approach the intersection, neither sees each other and neither looks to see if anyone is coming, so they collide in the center. Both are at fault. Was one car going faster than the limit? What if one driver had a stop sign and the other didn't, and the guy with a stop sign ran it? Well, that doesn't automatically excuse the other driver. What if that other "innocent" driver saw the car coming and "assumed" that, since he had a sign, that he was going to stop?

Well, there's comp neg. That "innocent" driver is at least 10% at fault for failing to take evasive action.

I'm not going to define every scenario, and I HATED making comp neg decisons. HATED IT.

But here's a fact that a lot of people like to ignore; they often complain about insurance companies paying only 80 or 90% of a claim, and say idiotic things like: "You're 10% at fault for just BEING there!"

FALSE, FALSE, FALSE!

If you are illegally parked and your car is unattended and gets hit BECAUSE it was parked so strangely and in a location clearly marked for no parking, THEN you could be 10-30% at fault for BEING there even if you weren't in the car and driving at the time.

Other than that....no. If your car is legally parked and a drunk swipes it some night, you're not at fault. Even if your insurance company has to pay because the other car/driver can't be identified, it doesn't change the fact that you are not liable in that case.

The other complaint about insurance companies and comp neg: People blame the insurance company fr the comparatie negligence law. The reality is that this is not something made up by or for insurance companies. It's a STATE LAW. The insurance company has to ABIDE by it. So don't blame the insurance company if you are held liable for something you did wrong, which also has to be cited. List your vice: inattention, speed (by the way, it's on the books that speeding negates right-of-way), etc.

JOINT AND SEVERAL LIABILITY

When I started, the "Joint and Several" law was something I didn't understand, until I had to handle a claim involving it.

At the time, the law stated that, (in the event of a multi-vehicle or other property accident), if you are more than 15% at fault, then you can be held responsible for 100% of the damages. WHEW!

Keep in mind, this is no longer the law, and I will explain the change after I explain the scenario which only makes sense under the old law.

Here's what happened:

Car A was sitting in traffic, waiting for the light to turn. He was far back from the light. It was a divided highway, separated by a grassy median, no fence, and the southbound side was flowing freely.

Car A happened to glance in the mirror and saw a black car coming towards him, not slowing down. He KNEW that he was going to get hit and pushed into the car ahead of him. He cranked his wheel to the left, bracing for impact, hoping that the impact with the turned wheel would drive him into the median and alongside traffic so he could avoid hitting the car in front of him. He also touched his gas pedal just before impact, hoping to ultimately avoid being hit. Thus, at the time of impact, he was both steering his car TOO FAR to the left AND giving the car a little gas.

I actually commend his very quick thinking, and had he had more time, it could have worked.

As it was, it didn't. Car B hit him, and because he had turned his wheel TOO FAR to his left, AND because of the hard impact and even the small acceleration he gave his car, Vehicle A literally SAILED over the grassy median, airborne, and T-boned a car in the southbound lane.

The southbound car couldn't have done ANYTHING to avoid the accident. Who could have seen THAT coming?

The driver of Car A stated to me that he felt that the driver of Car C was fully innocent. He believed that Car B was 100% responsible for the accident. The driver of Car C ALSO agreed that Car A was innocent, and felt that Car B was 100% at fault for causing the rear-end collision.

I as the rep for Car C agreed, (Call me Company C), the rep for A agreed, and we both tried to find the company for Car B.

I can't remember, but I do think I got a statement from Driver B. She first told us she'd get her insurance info...she was later to admit that she did not have insurance on her vehicle at the time of the loss.

Well, that left 2 very seriously damaged vehicle, and 2 companies who agreed neither was actually at fault in the loss. In other words, the proximate cause of the entire accident was Car B, and we would have difficulty collecting from this individual who had no insurance.

That's where joint & several came in.

I hated to do it, but I finally understood what it meant. The reality was that Driver A HAD made errors that caused him to sail over the median. Ironically, if he'd not tried to do anything, he would have been 100% innocent.

Unfortunately, it was his evasive actions that caused him to crash into my customer. Would he have hit her if he hadn't been rearended so hard? No. But under this law, he was more than 15% at fault for my customer's damage...and so we sent a subrogation (insurance term for collection) claim against that company.

Remember, we didn't make the law. And it is the Subro department that ultimately determines whether joint & several apply...and it did.

Now, as I understand it, that did not mean that the driver of Car A was HIMSELF 100% liable for the loss...he was 15-20% liable for MY CUSTOMER'S loss, and had Car B had insurance, we would NEVER have brought a claim against his company. And that's exactly what was going on..we were bringing the claim against the company.

That company, then, would be responsible for collection of all of the damages from the actual at-fault party. But first they had to pay us. And as I recall, the claim went to arbitration and Company A had to pay us.

NOW...in August of 2005, I believe, that law changed.

As it stands, now, only if you can be held 50 or 51% (I think it's the latter) liable for a loss, you can be held responsible for 100%. Therefore, in the case I cited, if it happened now, Company A would NOT have been subrogatable. So, this was a change in the law which is greatly beneficial for the average person whose evasive moves go weirly awry.


OTHER LIABILITY LAWS AND ISSUES

When I first began my job, my company sent me to another state to learn the generalities of policies everywhere. So I learned that some states have laws that make you pay for the percentage you are at fault. So if you are 30% at fault, you pay for 30% of the damages (in a multi-vehicle accident).

I don't remember much about that stuff as I promptly forgot about it since it didn't apply in my state and we don't handle out of state claims.

However, thare are some general things all people, at least in Minnesota (and check the laws in your own state) should know:

If you are involve in a multi-rear-end collision, and you are car 4 out of 7, your claim is against the guy who hit everyone so hard so as to involve 7 vehicles. You cannot collect against the guy immediately to your rear...he wouldn't have hit you unless he was pushed into you. UNLESS it was one of those rare situations where he hit you first, and then another idiot hit everyone harder and the first guy was pushed into you again. And in that case, the "chain breaks.

And likewise, then you'r not liable for the damages of the person ahead of you.

HOWEVER, TAKE NOTE! In a multi-vehicle crash, get EVERYONE'S INFORMATION! Get license plates, car make/model/year, insurance company and policy, driver's name, DL#, some kind of phone number, some address (even work), etc. Get everyone...your insurance company needs all of it in order to make a proper liablity decision and collect from the correct company. AND, plan to go through your own company and pay your deductible. It will save you time and get you back on the road.

I can understand not giving out your own info, but many people have cell phones, use work addresses, or in the case of law enforcement, use the police to do a "driver exchange" form. In the case of my recent accident, I gave the guy one of my business cards. I was NOT going to hand him my home # and address.

BODILY INJURY CLAIMS

In Minnesota, under the No-fault laws, you MAY still have a bodily injury claim. There are "thresholds" that apply:

* $4,000+ in treatment (does not include diagnostic tests such as MRI's)
* Death - your family collects.
* Dismemberment - in the former, your family collects. In the latter, it's evaluated based on what has been dismembered, long-term prognosis, etc.
* Severe injury - if you have broken bones or scarring, you have a BI Claim.

This differs from "Tort" states, where you'll see on your policy the term "Medpay $5,000" In Tort states, if you are injured, from the moment you or your insurance company spends $1.00 as a result, you have a bodily injury claim.

In this regard, No-fault is a bad thing...it's why PI attorneys are so rampant here. They will literally counsel their clients to run up treatment bills at chiropractors so they'll reach a $4,000 threshold, qualifying for the BI claim, which the attorney will then get paid to settle for you.

Now, a lot of people think they have to get attorneys to handle their claims. And they LOVE to use attorneys as a threat against an insurance company for ANY conflict in a claim, injury or property damage only.

So, I gotta tell ya...that's not a threat. I LOVED it when people got attorneys. First of all, it meant that the claim went buh-bye to the Casualty unit. (That's a definition I forgot earlier...they specialize in massive injury and litigation, also separated by sub-specialties. So they handled all attorney-repped claims). Anyway, often I also LOVED dealing with the attorney of an injured party because then I could get things done like settle the total loss with the attorney, who knew market values and wouldn't ask for $5,000 for a car worth $500 and claimed as a "show car" from 1979.

A claim is not handled differently if an attorney steps in; the only thing that changes is that all correspondance goes through the attorney. And sometimes clients did not understand this and would call to speak to the rep. We COULDN'T answer their questions without their attorney being on the line, so we'd have to either try to reach the attorney or have the person call the attorney to call us for the answers. What a ridiculous system. But we didn't create it; we had to follow it so as to avoid any accusation of manipulating the client or other such thing in the attorney's favor.

Also, an attorney will charge 30-40% of the settlement. And the settlement offer evaluates only the individual's injuries, prognosis, "pain and suffering", and other things, NOT the amount the attorney is taking off the top. So, people who do not get an attorney get paid more.

Now, I also realize that some companies don't follow an ethical code. Some of my own trainers came from a company that did things incorrectly and skimped on settlements. That's why she left. And I also had co-workers involved in accidents and garner BI claims (one had cracked ribs and other injuries), and was offered a paltry amount. He took the offer to our casualty unit and they were SHOCKED at what that company was offering. My friend, by that time very well versed in what SHOULD be happening, at a professional level, tried to negotiate for himself. He ended up resorting to getting an attorney, one recommended by the Casualty reps.

So, there IS a place for attorneys, and contrary to popular opinion, the business relationship between companies and attorneys is NO one of animosity. There are exceptions, certainly, but overall, the attorneys I worked with were decent.


TANGENT

I didn't work with ANY attorneys in connection to injuries - it wasn't my job. But I DID have clients get attorneys when they realized that we were investigating them for fraud. Thus, my conversations with those attorneys were very guarded, yet cordial. We knew one another's positions, and the main point of our contact was keeping updated, passing documentation back and forth, making and answering demands.

In the beginning, this intimidated me somewhat. After awhile, I got used to it and even though we "opposed" each other, our conversations were very friendly.

One in particular, just before I quit, was weird. I had inhereted a very old claim, very fraudulent, which had been closed for non-cooperation of the customer who refused to provide certain information. At first contact, the attorney was not formally representing the client, but was calling with him in his office, trying to understand the status of the claim, whether it had been denied or not, and if not, why not. He asked for a copy of the policy, which I provided. At the time, he was evaluating whether there was a case or not.

Well, he ended up taking the case. The attorney realized I was not the original file owner, realized that the file had to be gotten out of a remote location due to the fact it had been closed for a couple years, and we had a very candid conversation when I continued to stick to our position that Customer X needed to cooperate with a particular demand on our end. We could not continue our investigaion without it.

Well, during that conversation where the attorney stated that he was moving to litigation if we did not provide a certain thing by a certain date 5 days down the road, and we both realized that we were not going to cave (our own case was very strong). As it was, I also had to reveal to the attorney that, yet again, the file was being assiged because I was leaving my position. I defined to him what I was doing in the meantime to meet the demands that I could and set an expectation as to when the newly assigned rep could contact him. I also told him I'd have my manager reassign the file ASAP so the new rep could review the file.

Well, that attorney and I by then had gotten to know each other, and so he asked me why I was leaving? To go to school, make a career change, etc. He wished me luck...as it turned out, he'd gone to the Lutheran Seminary some years ago, and truly valued the experience although he determined he was not called to be a Pastor, but to the practice of Law.

It was fascinating, and I must say, a great way to end my business relationship with an opposing attorney!

So! Although this may seem to be anti-attorney, I must say that they are necessary in some cases, they fulfill a role, but they are not necessary in ALL cases. And they DO turn some clients down.

I've also had attorneys as my own customers and found them to be some of the best because they knew how things worked so it was very easy to proceed and get things accomplished.

OK, end of THAT tanget. And my fingers are tired from typing.

There will be further posts on the topic of women and body/repair shops, not just involving my work in insurance, but also as a customer. But for now...let's just go with what we have, shall we?

And again...please don't use the combox as a form for airing grievances, please don't name any companies or persons. I'm providing this info for your education so that YOU can be more informed. If you are in another state, some of the above may differ via state law, via company (if the info was company-specific). And I'm willing to answer any questions I am able.


And I'm already remembering why I was so burned out and why I quit that job.

3 comments:

uncle jim said...

Wow!
What kind of course credit can we get for this?

Courageous Grace said...

Thanks for the info (although I live in Texas and Minnesota law doesn't apply here, some things do seem the same)!

Something else that I've discovered is a really smart thing to do is get what's called GAP insurance (offered through my bank) when purchasing a new (or mostly new) car. In the event of a total loss and the insurance company pays the current value of the car, one might still have $$ left to pay on their loan. GAP covers the depreciation amount. Of course, in my particular accident, my car was wrecked two months after I bought it and the ins. co. paid more than the loan amount so I didn't need the GAP but I made sure to get it on my replacement vehicle as well.

Adoro said...

YES! Gap coverage is really important, and thanks for the reminder. I'm going to be doing a post on the different coverages and what they mean...collision, comprehensive, PIP, BI, UM, UIM, etc. Gap will be part of that discussion.

I got Gap on my car when I bought it, having dealt with so many people who had negative equity and were put into bad financial situations.