Understanding Recovery in Excess of Insurance Coverage in Car Accident Cases in Louisiana

coins_currency_investment_insurance_0-1024x683Receiving compensation from the at-fault driver’s insurance policy after a car accident can bring relief. However, it is essential to be aware of the potential complications if the awarded amount exceeds the other driver’s insurance policy limits. This case serves as an example of what can happen in such situations and highlights the importance of understanding the legal implications.

Claudio Larios was waiting to find a parking spot at her apartment complex in Metairie, Louisiana, with Marlon Funez riding in her passenger seat. Lindsay Vehorn was stopped behind them in her car. A truck came around the corner and tried to get in front of Vehorn and her car, apparently not seeing Larios in her car. The truck hit the back left of Larios’ car. The truck passenger was drunk. Larios could see the driver of the truck before he drove off. Larios and Funez had to receive medical treatment due to the incident. 

The day after the accident, Larios encountered the truck passenger. She gave the passenger her contact information and asked that it be passed along to the driver of the truck. Julio Martinez, whom Larios recognized as the truck driver that had hit her car, subsequently contacted her and provided her with insurance documentation. Because Larios and Funez could not locate and serve Martinez, they voluntarily dismissed the claims against Martinez and brought all claims against Imperial under Louisiana’s Direct Action Statute, La. R.S. 22:1269. At trial, the court found in favor of the plaintiffs. Larios was awarded $21,318 ($6,218 for past medical expenses and $15,100 for past pain and suffering). Funez was awarded $21,267 ($5,267 in past medical expenses in $16,000 for past pain and suffering). The court ordered Imperial to pay the amounts. Imperial appealed. 

On appeal, Imperial argued the district court erred in awarding plaintiffs damages over Martinez’s policy limits of $15,000 per person for bodily injury and $30,000 per accident. Here, the trial court had ordered Imperial to pay $42,575 ($21,318 to Larios and $21,267 to Funez). Under Louisiana law, an insurer can be liable for a judgment against its insured that exceeds policy limits if the insurer did not deal in good faith with the insured’s claim. See e.g., Smith v. Audubon Ins. Co. When an insurer does not act in bad faith, it is free to settle or litigate the case as it chooses and will not be liable for a judgment over the applicable policy limits. 

Here, the appellate court found no evidence Imperial did not deal with the claims against Martinez in good faith such that Imperial could be liable for a judgment over the insurance policy limits. Therefore, the appellate court amended the trial court’s judgments to $15,000 each for Larios and Funez to comply with Martinez’s insurance policy limits. 

When seeking compensation after a car accident, it is crucial to be aware of the insurance policy limits of the at-fault driver. In cases where the awarded amount exceeds these limits, complexities may arise. Insurance companies are generally not liable for judgments that exceed policy limits if they have acted in good faith. Navigating the legal process, including possible appeals, requires the assistance of a skilled attorney who can guide you through the complexities of insurance policy limits and help you seek fair recovery for your injuries. By understanding the law and working with an experienced lawyer, you can maximize your chances of obtaining the compensation you deserve.

Additional Sources: Claudia Larios and Marlon E. Funez v. Julio Gomez Martinez and Imperial Fire and Casualty Ins. Co.

Additional Berniard Law Firm Article on Insurance Coverage: One Three Letter Word in an Insurance Policy Can Have Six Figure Implications  Can Uninsured/Underinsured Motorist Coverage be Applied To a Temporary Substitute Vehicle?

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