Why Accident Victims May Be Entitled to More Money Than Insurers Let On

When you’re in a car accident, injured badly, and have a lot of medical bills, the biggest question you might have is whether the other driver has enough insurance to cover everything. Maybe you, or even your attorney, asks the insurance company what the policy limits are–that is, how much money is included under the insurance policy to deal with a claim – and they respond. They might tell you that the liability coverage of $100,000 per person, $300,000 per accident is available as the policy limits. You would have no reason but to conclude that what you were being told by the insurance company was true.

Unfortunately, it is not uncommon for insurance companies to lie about how much money is included under the insurance policy. They can do this by not letting the person know that there is something called an umbrella policy. Read on to learn why insurance companies lie about the money available and find out what you can do to protect yourself.

What is Umbrella Coverage?

A policy limit is the dollar amount that an insurance policy will pay out. If there is a limit of $100,000 per person, but a person has damages totaling $30,000, that will be adequate. In the event that a person has damages totaling $200,000, you could be facing major problems. That person may sue you for things like wrongful death, causing you to retain legal counsel and maybe even acquire serious debt. 

This is where umbrella coverage comes in. Umbrella coverage is a great idea for many Illinois drivers. Drivers who have a large net worth, have a family to support, or spend a lot of time driving (for instance, do it for work) are advised to get an umbrella policy. It is important to note that not all drivers have umbrella coverage and they are not required by law to have it. 

In the event that damage resulting from the car accident exceeds the policy limit, there is a safety net. Umbrella coverage is often also called “excess” insurance, which is available only in major cases once the liability policy is exhausted. Umbrella, or excess coverage, is literally a unique type of coverage; it is not identified as “liability coverage” but rather is a separate and distinct policy from regular auto insurance.

Insurance Companies Do Not Need to Tell You About Umbrella Coverage

The problem for you is that insurance companies do not need to tell you that umbrella coverage exists. Every day, they deal with demands regarding policy limits and requests for information on claims. They are overwhelmed by claimants. And, remember, their job is to pay out as little to you as possible. Insurance is a business, and paying out large claims is bad for business.

Insurance adjusters are smart. They know that most people will not think to ask about umbrella coverage. Some attorneys may not either–but reputable Illinois insurance attorneys definitely do. Insurance adjusters realize that many claimants cannot afford attorneys, and so they can be confident that they will not need to disclose the umbrella policy. And some claimants simply believe attorneys do not make a difference compared to handling the claim themselves, without legal help. This is because insurance companies will lead them to believe that they are being fully transparent and discourage hiring a lawyer, saying things like it will lengthen the timeline or telling the claimant that they will end up losing a lot of money with legal fees.

You don’t know what you don’t know… which includes knowing whether, and how, to ask for disclosure of umbrella and excess policies, specifically. By withholding this information from self-represented claimants, insurance companies settle claims for much, much less than their true value. And they do so lawfully. The claimants are none the wiser.

CASE STUDY: Kim v. State Farm 

A recent Illinois case shows just how common it is for insurance companies to misrepresent policy limits and coverage. In Kim v. State Farm Mutual Automobile Insurance Co., 2021 IL App (1st) 200135, issued June 30th of 2021, State Farm said their policy limits for liability coverage were just as above: $100,000 per person, $300,000 per accident. Only after the injured Plaintiff’s attorney threatened sanctions did State Farm do the right thing and disclose an additional one million dollars of umbrella coverage. That is a major oversight, right? Think what you could do with an additional million dollars!

The Appellate Court in Kim v. State Farm ruled that an insurance company is required to disclose liability coverage limits, in response to a proper demand by a claimant, based on Section 143.24b of the Illinois Insurance Code. However, insurance companies in Illinois are NOT required to disclose additional coverage in an umbrella or excess policy based on the law. *They must disclose only the primary layer policy.

Here We Go…Again 

Perhaps you might think this is a rare situation that doesn’t happen often. On the contrary, we are working on a case in which a major insurance company initially tried to act like no coverage was available for an accident. The accident involved many wrongful deaths and claims for injuries. Only after pushing multiple times for specific disclosure of an umbrella policy did the company reveal (exactly like in the Kim case) that an additional one million dollars of umbrella coverage exists. Yes, withholding information about insurance coverage does happen. We have seen it and will hold them accountable.

Hire a Reputable Illinois Insurance Attorney

Ask yourself: would you try to take out your own appendix? 

Presumably not. When the insurance company fails or refuses to disclose the information, or if it’s only partially disclosed (such as the liability limits, only), the company forces you to negotiate in the dark, without knowing what is potentially available. This will cause you to settle for much, much less because you simply do not know it’s even possible to get more under a different policy. When dealing with major claims for bad injuries, or worse, you cannot do it yourself any more than you can take out your appendix. Good lawyers have the expertise and credibility with insurance companies to know how to ask for all policies, including umbrella policies and excess coverage.