October 10, 2023 In Insurance, Personal Injury

“Opened the Policy” in Personal Injury Law in California*

Within the realm of personal injury law, the term “opened the policy” has a specific connotation, especially when dealing with insurance companies. Here’s an exploration of this term for a clearer understanding:

1. Definition

When an attorney states they have “opened the policy,” it signifies that due to the insurance company’s handling of a claim, the insurer might now be exposed to liability beyond the policy limits.

2. Circumstances

This can arise when:
  •    The insurance company acts in bad faith by not settling a claim that could have been settled within the policy limits.
  •    The case goes to trial, and a verdict exceeds the policy limits.
Example: If you have a claim worth $150,000, but the policy limit is $100,000, and the insurer refuses a fair settlement, they risk “opening the policy.” If the case goes to trial and the judgment is $150,000, the insurer might be responsible for the entire amount due to their bad faith handling.

3. Why It’s Used

  •    Leverage: It serves as a warning to insurance companies, emphasizing the risk they’re taking by not settling within policy limits.
  •    Protect Clients: By making insurers aware they’ve “opened the policy,” attorneys aim to secure better settlements for their clients.
  •    Address Bad Faith: It can lead to additional litigation against the insurer for bad faith handling of a claim.

4. Specific Examples

  • Delayed Response: An insurer might delay or provide inadequate responses to a settlement demand, prompting the attorney to warn they’ve “opened the policy.”
  •  Ignoring Evidence: If an insurance company disregards clear evidence pointing to their insured’s liability and refuses to settle, they risk exposure beyond policy limits.

5. Subsequent Actions

If the attorney’s warning about “opening the policy” isn’t heeded, the next steps might involve:
   Proceeding to trial, hoping for a verdict beyond policy limits.
   Filing a separate lawsuit against the insurer for bad faith handling of the claim.
It’s crucial for individuals involved in personal injury claims to understand the strategic implications of such terms and their potential impact on case outcomes. If you find yourself in a situation where you need representation in a personal injury case, The Mines Law Firm is here to assist.
Jasmine Mines, Esq.
The Mines Law Firm