America is quickly becoming what I call a Cellular Culture.
America is quickly becoming what I call a Cellular Culture.
You would think that a contract is a contract is a contract. We expect parties to uphold their ends of a contract whenever they enter into them.
Unfortunately, that is not the case with some insurance companies.
I will not mention specific insurance companies, but some insurance companies try to weasel out of claims by using a process called “void ab initio.”
Void ab initio is a legal fiction that allows one party to a contract to pretend that the contract never existed. Some insurance companies use this legal fiction in order to avoid an insurance contract rather than paying the value of claims when they occur.
What happens in a void ab initio action is the insurance company returns all your policy premiums and then pretends that your insurance policy never existed because it supposedly never would have written your policy if it had known about certain facts.
Those insurance companies will happily take your insurance premium monies for years until you or somebody else makes a claim. After you or someone else makes a claim, the insurance company holds what is called an Examination Under Oath (“EUO”) EUO in order to discover something that would allow them to void your policy contract. The insurer is often looking for a way to deny your claim if it holds an EUO.
Sometimes they will do it based upon just a recorded statement.
So what do the insurance companies look for?
Well, it can be as simple as somebody who lives in your home that you did not disclose to your insurance agent when you got the policy. I have seen insurance companies deny coverage because the insured party did not disclose that they had children of 15 years or older living with them, live with their parents, had roommates, or anything else that would raise the premium by such an insignificant amount is $10 (or maybe less) per policy period.
I have also seen this occur once somebody has changed their address without notifying the insurance company.
One insurance underwriter admitted during her deposition that her insurance company was engaging in what is called “post-claims underwriting.” All that means is the insurance company is trying to reach back in time in order to say they would not have underwritten your policy had they known about some fact.
So you didn’t tell your insurance company that you drive for Uber or Lyft when you took out the policy? Get ready for a denial. Nothing is covered. Your policy is voided. It’s as if it never existed.
In my opinion is that it’s an underhanded way of denying claims instead of paying them. It is usually the lower-tier insurance companies that act this way. They will literally try to void your policy for any reason they can rather than paying thousands of dollars to pay your claims.
However, many times it is the insurance agent who fills out the insurance company’s initial policy application. This is particularly true when it comes to immigrants, poor people, and others who do not have the best reading skills. Sometimes the insurance agent, claims adjuster, or underwriter do themselves not understand questions the these applications ask. If the insurance company representatives do not understand their own applications, then how are common citizens expected to do so?
Here is how to avoid the most common void ab initio traps:
Void ab initio is a tool that insurance companies often use in order to deny claims that they should have paid. Do not give the insurance company any ammunition to claim that it would not have written your policy if it had known about some circumstance that you do not think is important.
It’s all important.
The insurance company denying your claim is bad enough, but it gets even worse, because the State of Florida can suspend your license because you got into a crash and did not have insurance—even though you did. How unfair is that? Yet it happens frequently in Florida.
Avoid a void ab initio problem by following my advice.
Christopher R Dillingham II, Esquire
Here is the difference between how plaintiff’s lawyers and defense lawyers get paid in personal injury cases:
Plaintiff lawyers represent the injured parties who have either filed a claim or lawsuit against the defendant who injured them.
I’m a plaintiff’s lawyer. I represent people whom others have hurt through negligent acts. I don’t do defense work even though I get asked to do so fairly frequently.
Plaintiff attorneys usually take personal injury cases on a contingency fee basis. That means we get a percentage of whatever you recover plus our costs for handling the case. Costs can be postage, ordering police reports and medical records, holding depositions, and paying expert witnesses, among other things.
Personal injury cases are calculated risks for plaintiff’s lawyers. We can invest hundreds of thousands of dollars of time and money in a contingency fee case, and there’s never any guarantee we will win. If we don’t get a settlement or win a case, then we don’t get paid.
It’s far different for defense lawyers.
Defense lawyers in personal injury cases represent people who have injured other people in negligence cases like car accidents, slip and falls, and other injury cases.
Defense lawyers—who are almost always paid by insurance companies—get paid by the hour. They often have a vested interests in maximizing their “billable hours.” The more time a defense lawyer can ethically bill, then the more money he and his law firm can charge.
What are billable hours?
Well, that’s how much time a defense lawyer puts into a case in six minute increments (unless the insurance company is paying the lawyer a flat fee to defend a case). There can be other formulas, but six minute increments is pretty standard.
If the defense attorney is what we call “house counsel,” then he gets paid whatever his insurance company employer pays him. Most house counsel are salaried employees. Most defense attorneys are not house counsel, though, and use billable hours in six minute increments to determine what they get paid.
That means if the typical defense attorney makes a one minute phone call that he bills his client for six minutes of time.
So if a defense attorney makes six one minute phone calls within six minutes then he can bill the insurance company for 36 minutes of his time (at several hundred dollars per hour). In other words, a defense lawyer can theoretically bill for more hours than there is in a day.
That’s perfectly ethical. It’s how they work. It might not seem logical, but it’s ethical.
Yet win, lose, or draw, a defense lawyer gets paid. The insurance company pays him no matter what happens in a case.
No matter what, a defense lawyer gets paid, unless he takes a case pro bono.
I have encountered only one case in which a defense lawyer had taken on a personal injury case pro bono (for free), and in that case, the defendant was uninsured.
That can happen. It just doesn’t usually happen. Everybody has bills to pay.
So how do I get paid as a plaintiff’s lawyer?
Well, let me tell you about a conversation I had with a Miami defense attorney after court (I handle cases throughout Florida) last week who tried to convince me to drop a negligence case:
Miami Defense Attorney: I don’t understand why you’re here. I get paid by the hour no matter what happens. I don’t think you can win [this case].
Me: I’m here because I get paid for results, and I make a damned good living doing it. I like this case. We’re going to trial.
Plaintiff attorneys in personal injury who work on a contingency basis get paid for . . . Wait for it . . . Results.
Not by the hour.
No results? Then we don’t get paid in contingency fee cases. That’s it. End of story.
I get paid for results in personal injury cases. Nothing else. That makes me highly motivated to get my clients the best possible results that I can.
Here’s the law in Florida regarding liability in crashes: Florida is a “pure comparative negligence state.” There are states that use other standards of law, so this post only applies to Florida. I’m not licensed to practice law in other states.
Big injuries beat low policy limits almost every day of the week. Herniations? Broken bones? Amputations or death? It’s usually no contest.
So how does comparative negligence work? The easiest explanation is to pretend Driver A and Driver B both have $1 of damages. Driver A is 75% at fault and Driver B is 25% at fault. Here’s how that breaks down:
The above picture is of a question that I answered on Avvo.com. The person who asked the question obviously did not understand how liability works in Florida.
People often believe that who gets the ticket in a crash matters. It does not. Police officers do not determine liability in the state of Florida. The only thing a police officer tries to determine—and judges do not always agree with those police officers—is whether or not a driver violated a state statute.
Most police officers have no idea that Florida is what is called a “pure comparative negligence state.”
What that means is that you can only recover the amount of damages for which you are not at fault in a crash. Rarely are crashes 100% the fault of one driver or the other. Drivers can often brake quicker, drive slower, react sooner, and stop more swiftly whenever a collision is about to occur. Even rear end collisions only have what is called a “rebuttable presumption of liability.” That means, contrary to the public’s perception, that the person who rear ends another person is not always 100% at-fault in a crash.
So how does comparative negligence work? The easiest example is to use 2 drivers who both have $1 worth of damages. Let us say Driver A is 75% at fault. Driver B is 25% at fault.
Driver A can collect $.25 worth of his $1 in damages.
Driver B can collect $.75 worth of her $1 in damages.
So who decides who was negligent in a crash? Well, in pre-suit cases, claims adjusters do that initially. If claims adjusters do not agree, then they will often use what is called an arbitration panel to decide who has what amount of comparative negligence. The arbitration panel, though, is made up of claims adjusters, and claims adjusters are notoriously conservative.
That is where I come in. My job is to advocate for my client in a personal injury case. I do that even in pre-suit cases. Of course, if I have to file a lawsuit in a personal injury case, then I argue my client’s case to a jury, and the jury decides who has what amount of comparative negligence.
Claims adjusters and juries look at many things when trying to decide comparative negligence. They may examine the points of impact, skid-marks, position of the vehicles within an intersection (in the above case), the amount of crush damage, and the amount of reaction time both drivers had before the collision occurred. In some cases, traffic light sequencing comes into play, and a jury may even consider the weather conditions that could affect how one should drive such as in the rain.
It is a complicated process, but one thing that claims adjusters and juries cannot consider is who received a traffic ticket. That is because traffic tickets are not admissible in court as evidence. Generally speaking, the police officer is not going to see a crash occur, and the police officer is merely guessing at who violated a state statute. Even if I were to subpoena a police officer to testify at trial, all the police officer could testify about is what he saw when he got to the scene. That is it.
This is why I tell my clients I do not care if they received a traffic ticket. Many attorneys will not accept a case if the client received a traffic ticket, but I do not care. What I care about are the injuries my client has and the available policy limits the other driver and my client have at the time of the crash.
Here is why I do not think who received a traffic citation is important: How much is 1% of the human life worth? How about 1% of a broken arm? 1% of the missing eye?
One percent of an injury could be worth far more than the other person’s bodily injury liability limits or your uninsured motorist limits. If the other driver has very low policy limits, and my client has sustained a severe injury or died, then even if my client is 99% at-fault for the collision, then my client deserves 1% of her damages. One percent of a severe injury is often worth the full amount of the other side’s bodily injury policy limits.
I believe everybody is entitled to recover their compensatable damages.
The other issue is that claims adjusters are often wrong about the positions they take in regard to liability, and when they become so stubborn that I must file a lawsuit, then my experiences that that position can change, and many times, it changes in my client’s favor. I have had claims adjusters swear up and down that they were not going to pay me any more than they were already offering me, and when I filed a lawsuit, suddenly everything changes.
Does that always happen? Of course not. But it has happened often enough that I believe in the awesome power of a lawsuit to persuade an insurance company to do the right thing.
If you have any questions about Florida’s pure comparative negligence law, I invite you to contact me.