accident attorney Insurance Claims and Negotiations 1 — Questions and Answers
Question 1: What is an 'independent medical examination' (IME) and who typically requests it?
- A medical evaluation ordered by the defense or insurer to assess the plaintiff's injuries and causation (Correct answer)
- An examination conducted by the plaintiff's treating physician
- A government-mandated medical review
- An examination required before filing a lawsuit
Correct answer: A medical evaluation ordered by the defense or insurer to assess the plaintiff's injuries and causation
IMEs are requested by insurers or defense counsel and conducted by a physician of their choosing to challenge the severity, causation, or treatment of the plaintiff's claimed injuries.
Question 2: What is 'bad faith' insurance handling?
- An insurer's unreasonable refusal to settle a valid claim, pay benefits, or properly investigate, exposing it to extra-contractual damages (Correct answer)
- A dishonest misrepresentation by the policyholder on the application
- A fraudulent accident staged by the claimant
- An attorney negotiating outside the policy limits
Correct answer: An insurer's unreasonable refusal to settle a valid claim, pay benefits, or properly investigate, exposing it to extra-contractual damages
Insurance bad faith occurs when an insurer violates its duty of good faith and fair dealing by unreasonably denying claims, delaying payment, or failing to defend, potentially exposing it to punitive damages.
Question 3: What is a 'policy limit' demand and why does it matter in settlement negotiations?
- A demand that the insurer pay its full policy limits to settle the claim, which if refused can expose the insurer to excess liability (Correct answer)
- A demand the plaintiff reduce their claim to fit within the policy
- A court order capping damages at policy limits
- An agreement to settle for less than the policy maximum
Correct answer: A demand that the insurer pay its full policy limits to settle the claim, which if refused can expose the insurer to excess liability
When a plaintiff makes a policy limit demand and the insurer unreasonably refuses, the insurer can be held liable for the full judgment even if it exceeds the policy limits.
Question 4: What is an 'offer in compromise' or Section 998 offer (in California) in personal injury litigation?
- A statutory offer to settle that shifts cost-burden to the rejecting party if they fail to beat the offer at trial (Correct answer)
- A government tax compromise for settlement proceeds
- An attorney's internal settlement authority
- A mandatory mediation requirement
Correct answer: A statutory offer to settle that shifts cost-burden to the rejecting party if they fail to beat the offer at trial
Statutory offers (like CA CCP 998) incentivize settlement by requiring the party who rejects and then fails to do better at trial to pay the other side's post-offer costs.
Question 5: What is a 'lien' in the context of a personal injury settlement?
- A claim by a third party (insurer, hospital, or government) against the settlement proceeds for benefits paid on the plaintiff's behalf (Correct answer)
- A court freeze on the defendant's assets
- A mortgage on the plaintiff's home to fund litigation
- An attorney's claim for unpaid fees
Correct answer: A claim by a third party (insurer, hospital, or government) against the settlement proceeds for benefits paid on the plaintiff's behalf
Medical liens, Medicare/Medicaid liens, and workers' compensation liens must be resolved out of settlement proceeds before the plaintiff receives the balance.
Question 6: What is 'first-party' vs. 'third-party' insurance coverage in accident claims?
- First-party claims are against your own insurer; third-party claims are against the at-fault party's insurer (Correct answer)
- First-party is for property damage; third-party is for bodily injury
- First-party pays medical bills; third-party pays lost wages
- First-party is no-fault coverage; third-party is fault-based coverage
Correct answer: First-party claims are against your own insurer; third-party claims are against the at-fault party's insurer
First-party claims (PIP, MedPay, collision) involve the insured claiming against their own policy, while third-party claims target the liability coverage of the at-fault party.
accident attorney Insurance Claims and Negotiations 1
What is an 'independent medical examination' (IME) and who typically requests it?