July 22, 2019 | Court & Insurance, Personal injury

I get this question quite often from my clients: “If the insurance company is paying for the verdict, then why can’t we just say that at trial?” The short answer is “Because the insurance company doesn’t want that.” The long answer is more complicated.

Here’s a hypothetical situation for you. Mrs. Smith is a very nice, fifty-year old fourth grade teacher. One day, she carelessly runs a red light and runs into Mr. Jones’s Lexus. Mr. Jones ends up with a herniated disc that requires surgery. He’s left with daily chronic pain and he is no longer able to earn his normal salary because he can no longer work. Mrs. Smith’s insurance company refuses to pay Mr. Jones for what was taken away from him, ie a pain free life and a life where he can earn what he’s really worth, so Mr. Jones hires an attorney. His attorney asks for a verdict of $15,000,000.00.

The jury has no idea if Mrs. Smith has insurance or not. They aren’t allowed to know. The jury knows that Mrs. Smith is at fault but can’t bring themselves to render a verdict that fairly compensates Mr. Jones because they are worried about bankrupting Mrs. Smith. And Mr. Jones appears to be wealthier than Mrs. Smith.

This leads to a terribly unfair result for Mr. Jones that is contrary to the law and provides a significant benefit for the insurance company.

The above example is the result of a system that has been set up in large part by insurance companies. In jury trials, we have something called the “collateral source rule.” The collateral source rule essentially states that a money judgment should be made on its merits with zero consideration given to whether or not the party has an ability to pay the money awarded. The idea is that whether the defendant has coverage of $25,000.00 or $100,000,000.00 shouldn’t matter because the amount of the harm caused is the same either way. And, this makes sense if we accept that jurors are required to decide the facts of the case and appraise the value of the damage caused in a vacuum.

But the law, like life, does not happen in a vacuum. And this makes sense, but it has been taken much too far. As lawyers, we are not even allowed to say the word “insurance” in a jury trial in any context because we might tip the jurors off to the existence of coverage.

Jurors often ask whether or not there is insurance coverage for the defendant in a case. I think they often wonder “shouldn’t the insurance companies just work this out?” I also think it’s a foregone conclusion that jurors are assuming there’s no insurance coverage because if there was, the insurance company would have just paid.

Here’s the reality. In the vast majority of cases, the insurance company only wants to pay for the medical bills and lost wages. They do not want to pay for the pain and suffering that was caused, the inconvenience, the loss of enjoyment of life, etc. The insurance companies only do what they want to do, and they are willing to hide behind procedural rules to make that happen.

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