Insurance and the court system


Going to court is expensive, whether you win your case or not. But for a properly insured defendant, the cost of court proceedings and the final payout can be much more manageable, or even covered entirely by insurance. Unfortunately, how liability insurance works in the case of legal proceedings is poorly understood by the general public, and many people don’t find out their insurance isn’t adequate until it’s too late to do anything about it. For example, many insurance plans will only cover bodily damages, and not mental or emotional problems resulting from an accident. Understanding how insurance works in a legal situation is vital, especially in personal injury cases.

Why we’re asking:

The world of insurance is complicated, and unfortunately many insurance companies take advantage of the fact that the average layperson doesn’t understand the intricacies to save themselves money. Finding out your insurance won’t pay out in a personal injury situation can be a rude awakening, which is why we’re turning to our legal professionals to learn what customers should look for in liability insurance, before they need it.

Share your thoughts below:

How does insurance work in a personal injury situation?

What do most insurance plans cover? What gets left out?

How often do you see clients blindsided by their insurance coverage, or lack thereof?

What one thing should everybody look for in an insurance plan that they may not think about until it’s too late?

Does a client’s insurance situation affect how you handle a case?

We look forward to your advice on the complicated intersection between insurance and the legal system.

Please post your answers in the comment field below!


  1. This is a complicated question. The answer differs from state to state and situation to situation. In New York your insurance company will pay for your medical bills in cases where you had a slip and fall accident or medical malpractice situation. The insurance will however, try to place a lien on their payments through subrogation and depending on what type of insurance it is may be successful. Medicare and Medicaid have statutory liens that must be satisfied. Other insurance companies may not have a right to subrogate. It is a complicated issue and one that is constantly changing. In NY their is an anti-subrogation statute which bars most insurance companies from placing a lien on your file. However, their are exceptions to this rule.

    If you were involved in a car accident your automobile insurance carrier’s No Fault policy would pay for your medical bills up to $50,000 and if the accident happened at work your employers New York Workers’ compensation provider would cover the bills.

    There are situations that insurance coverage can be disclaimed or denied in those situations there are certain doctors who may treat the plaintiff on a lien. Meaning that they will sign an agreement with the plaintiff’s attorney and then they would be able to recover a portion of the settlement or verdict.

    The type of insurance does effect the case because it can determine the quality of doctors that a client can see. Generally speaking No Fault and Workers Compensation are preferred payments to physicians whereas Medicare and Medicaid are not.

    All injured persons should immediately seek out legal representation because certain insurance policies have time sensitive notice requirements or notice of claim requirements.

  2. Many people who have been sued are fortunate to have insurance coverage, but the crucial factor is whether the insurance company will cover the alleged injury. The first step is for the insured party to file a claim with their insurance company. The most unfortunate scenario plays out when coverage is denied for failure to file a claim within the required period. Each policy differs as to the filing period, but be sure to file immediately so as to avoid denied coverage based on a late claim

    Although insurance covers many accidents and instances of negligence, most policies disclaim coverage for intentional acts. Clients who acted with intent to cause injury, or even in a grossly negligent or reckless manner, often find insurance refusing to cover the damage.

    A client’s insurance situation directly impacts the handling of a case as the insurance company provides an attorney to defend the case when there is coverage. Without coverage, clients are often on their own not only to pay for any judgment, but also to hire an attorney and cover any cost connected to the defense of the action.

  3. This a very complicated question. A legal thome could be written addressing these important issues. Everyone should check their insurance coverage and policy language carefully. Remember if you don’t pay a premium you don’t have coverage. Also read the disclaimers, so there are no surprises when an accident happens. Insurance covers for negligent conduct but usually not intentional conduct. As regards auto insurance some states have no fault insurance. Other states have quasi no fault insurance. And other states have only fault insurance.

    In Massachusetts physician’s try to avoid workers comp, Medicare an Medicaid insurance as the compensation rates are low.

  4. This is a complicated question that cannot be fully covered in the limited space offered here. Law schools offer semester long courses on this topic. If you have any questions, by all means consult with an attorney knowledgeable in the area of insurance. I am writing a general answer, and not considering no-fault insurance on automobiles or medical payments coverage under premises liability policies.

    What do most insurance plans cover? What gets left out?

    Generally, liability insurance covers the cost of defending a lawsuit as well as any damages that you are obligated to pay up to your policy limits. States generally set minimum limits, and those limits do vary from state to state. You policy’s declarations page will tell you what limits you have.

    There are exclusions in every policy as well. If one of the exclusions apply to your fact pattern, then you may not have coverage.

    How often do you see clients blindsided by their insurance coverage, or lack thereof?

    Once in a while, I have seen clients surprised by an exclusion that they did not anticipate or lower amounts of coverage than they expected. I have heard clients say they purchased “full coverage” believing that it would cover anything without limits. Be certain to ask your insurance agent about your limits and any exclusions found in your policy. Spend the time to understand the coverage you are getting when you purchase it so that you are not surprised later on.

    What one thing should everybody look for in an insurance plan that they may not think about until it’s too late?

    Adequate limits to protect themselves. Many people simply compare prices on the policies and select the least expensive coverage. This may result in low limits for liability or underinsured/uninsured motorist coverages. Your liability policy is what stands between an injured person and your assets. Make certain you have enough coverage to protect the assets that you are accumulating through your hard work.

    Does a client’s insurance situation affect how you handle a case?

    If I am handling a case for an injured party, it is the other party’s insurance that plays the largest factor. If they have limits lower than the expected recovery, then I would expect to spend some time researching what other assets they may have to satisfy any judgment. It is usually easier to pursue recovery from an insurance company than to levy on assets to satisfy a judgment, so lower insurance limits would likely add to the time and expense involved in a lawsuit.

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