Not Enough to Go Around: Now What?

When there are more claimants under a defendant’s auto liability policy coverage than the amount of the defendant’s coverage limits, the “not enough to go around” problem arises.  Let’s take a typical scenario in an auto collision personal injury matter in which there are three claimants (injured people), but the responsible defendant has an auto liability insurance coverage of $25,000/person, $50,000/occurrence.  With three claimants, who gets what amount?  In this example, each claimant can assert a damages claim of up to $25,000 under the defendant’s policy, but since there are more than two claimants, the $50,000 in coverage would have to be apportioned between the three.  If one person’s claim is obviously worth more than $25,000, and the other two combined are obviously less than $25,000, the total of $50,000 in coverage could be offered to resolve all three claims.
But what if there is a vigorous dispute about the value of the individual claims?  If it cannot be informally apportioned by mutual agreement amongst the claimants, the impasse could wind up with all three having to file lawsuits against the defendant, and the entire matter ending up in what is known as an “interpleader,” where the defendant’s insurance carrier acknowledges that it owes the combined $50,000 (in our example), but can’t take sides on who gets what because of the dispute on the value of the individual claims.  The insurance carrier “interpleads” the funds to the clerk of the court, and the judge determines apportionment via an evidentiary hearing.  In such a situation, all three claimants could end up incurring significant costs in presenting evidence of the extent of their damages (such as expert medical testimony) to the court, all of which would decrease their ultimate recovery from a limited pot.
The sensible route in such cases is for everyone to get very pragmatic about the value of their claims (and very practical about how much it will cost to present such claims in proof to the court), and work out an apportionment everyone can live with.  Janssen Malloy LLP has such a matter currently, in which our client has a claim valued in excess of the $25,000/person limit, but there are two other claimants (the cases arises out of a three car collision).  The likely outcome is that the defendant’s insurance carrier will ultimately pay our client the $25,000 limit, but the other two claimants will need to digest that their claims combined are not worth more than the remaining $25,000 in coverage.  Once the spectre of an interpleader proceeding becomes clear to the other claimants, they will need to assess how much they are willing to pay in costs to have the person in the black robe tell them the value of the apportionment.  Once that is understood, most people do what is in their own best interest, and come to terms with an agreed apportionment allocation.
People facing multiple claimant scenarios such as described above need experienced trial counsel to steer them through the obstacles involved with limited coverages and too many claimants.  The attorneys at Janssen Malloy LLP have the background to negotiate the right result for our clients.