QuestionIf a settlement is awarded that exceeds the amount of coverage by an isurance agency, what happens to the defendant as far as the excess award?
Answerxxxxxxxxxxxxxxxxxxxxxxxxx
Dear Nathan,
The Plaintiff who wins a judgement in excess of policy limits can pursue the losing defendant for collection of the entire amount, irrespective of the lower amount of his liability limits.
The winning Plaintiff, now known as the Judgement Creditor, can avail himself of all tools available to collect judgements, including: Supplemental Procedings wherein the Judgement Debtor is brought into court and made to answer questions on oath regarding all assets owned and/or owed to him; garnishment of wages, income streams, bank accounts, or any debt owed to the Judgement Debtor; attachment of personal property and sale thereof if necessary (cars, etc.); levy upon personal and real property assets (i.e., they get to seize them or lien them and sell them), and other remedies.
These powers are not absolute inasmuch as there is an exemption statute in each case that exempts from execution (seizing, selling, etc.) certain assets deemed necessary for survival. These vary from state to state, but generally they provide for a limited amount of cash, tools of the trade, a car of a certain limited value, a certain amount of equity in a dwelling (for example, $30,000 might be exempt from execution), and varous other assets. All of these are subject to limits, as specified above, in order to preserve the position of the Judgement Debtors vis'-a-vis making enough for them to live on and to get by on.
Does that happen often? NO. Here is why. If it is a big case, the losing Defendant, now known as the Judgement Debtor, can discharge the entire judgement through Bankruptcy, with certain technical exceptions and limits (UNLESS the accident was the result of an intentional tort, which would be a crime, or any other criminal act, such as DUI).
Plus, the Defendant's insurer may have committed bad faith by refusing to settle for its policy limits, in which case, the Defendant owns a right of action against his own company, which he then transfers to the Plainfiff to pursue in exchange for a release from liability.
There is more information on policy limits from the perspective of the insurance claimant, please see all the information Dr. Settlement has made available regarding policy limits at this link to my site:
http://www.settlementcentral.com/page0451.htm
I trust that this helps, and respectfully request that you leave some
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Best Wishes,
Dr. (personal injury) Settlement, J.D.
www.SettlementCentral.Com
