There’s something about knee-jerk reactions that are so satisfying. Probably it’s their very nature. They come on quick, they’re simple, and they’re over with in a flash. No need to keep thinking.
So when a proposal came before the Connecticut General Assembly’s Judiciary Committee to force potential defendants to declare how much insurance they’ve got, well, the knee-jerk reaction is that this is a trial lawyer’s dream come true – and the equivalent of a store pricing its goods based on how much money you’ve got in your pocket.
That’s certainly the way the Connecticut Business & Industry Association sees it.
Testifying at the legislature, CBIA staff attorney Kevin Hennessy argued that the amount of insurance a person or company carries should have no bearing on the value of a case. He asserted that policy limits are confidential. And he all but wagged his finger in denunciation of the idea behind the bill, with a clear insinuation that what’s really going on is that trial lawyers want to know how much they can easily sue for.
It’s easy to want to believe that’s the case – and maybe it really is, to some small degree. But a close look at the facts shows that CBIA is probably a lot more wrong than right, and that the trial lawyers may have a point after all.
The biggest fallacy in the business group’s legislative assault is the idea that policy limits are private. As it turns out, they’re not. The problem is when they turn from private to public.
Under current rules, defendants do have to disclose their policy limits – once a suit has been filed. That means that plaintiffs need only take the initial step of filing and serving court papers to get the information anyway. There is certainly no evidence to indicate that plaintiffs are dissuaded by that requirement now. Yet disclosing those limits earlier, on notice of intent to sue, may indeed help all parties.
In the first place, where there is limited insurance coverage or ability to recover damages, the plaintiffs may abandon their efforts altogether. At the very least, it may speed up the eventual trial process. It could certainly speed up the plaintiff’s ability to collect on their own insurance.
Most umbrella liability policies force insureds to first exhaust collection from the defendants insurance policy. Plaintiffs can’t even begin to plan for collecting under their own policies until they know the limit of the defendant’s coverage. Knowing that sooner will dramatically change the game plan for many plaintiffs.
A cynic might insinuate that contingent-fee firms might refuse to take cases with low insurance limits. It’s possible that could happen, but attorneys have a lot of mechanisms for self-policing, and it’s worth giving this change a shot. If lawyers are turning away people in need, there’s plenty of ways to tackle that problem short of keeping coverage limits a short-term secret.
Carl Anderson, president of the Connecticut Trial Lawyers Association, asserts that the proposed law will lead to less litigation, not more. That’s not what most people would assume at first blush. But he’s got a good point, and one that should carry great weight. Because thoughtful analysis usually leads to better decisions than do knee-jerk reactions. n