We have previously explained the concept of a fiduciary duty. To summarize, a fiduciary duty is a duty that arises when there is a special relationship. There is a fiduciary duty between an insurance company and their insured. One of the fiduciary duties that an insurance company has to their insured is to make sure that the insured is not exposed to a verdict that could result in the payment out of their own pocket. In other words, if Chaikin, Sherman, Cammarata & Siegel, P.C. files a lawsuit for an amount greater than the available insurance (which is often the case), there is a risk to the wrongdoer that Chaikin, Sherman, Cammarata & Siegel will receive a verdict greater than the amount of insurance. The defendant would then have to pay the amount of the verdict that is in excess of their insurance out of their own personal assets. An insurance carrier is required to protect their insured from an excess verdict by offering to settle the case within or at policy insurance limits when liability and damages in the case demonstrate that the risk of an excess verdict is real.
by Ira Sherman, Esq.