ziggy29
Moderator Emeritus
The problem seems to be that an insurance company may look at a particular case and, even if they think they would prevail in court, it may cost $20,000 to defend a $15,000 lawsuit. It's cheaper to settle out of court and pay out the $15K (or close to it) than go to trial, even if you prevailed in court.That sure seems like false economy on the part of the insurance company--save a nickel on lawyers and spend a dollar on the award/settlement. I guess they've figured it all out and it makes sense to them (or else they haven't done the cost/benefit analysis, which is improbable).
The problem is that the more this happens, the more it "pays" to file weak lawsuits against insurance companies and the more human nature would tell us that more "junk" lawsuits would be filed.
Therein lies the rub -- if an insurance company is being sued because of something I allegedly did, I don't appreciate them "settling" out of court and paying off when I don't think I did anything to cause liability. It's almost like a tacit admission by the insurance company that "I did it." I know it's not that legally but it feels that way. It's like they wouldn't be defending me -- but simply agreeing on my guilt and paying off.