Question

F a liability claim goes to trial, although the policy limits restrict the insurer's liability, the jury and judge are not bound to confine an award to the amount of such policy limits. If the court awards a judgment that exceeds policy limits, which one of the following parties is responsible for paying the excess award?

Select one:

A. The surety on a court bond

B. The state guaranty fund

C. The insured/defendant

D. The insurer

Answer 1

If a court awards a judgment that exceeds the policy limits of an insurance policy, the insured/defendant is generally responsible for paying the excess amount, as the insurer is not obliged to cover beyond those limits unless specifically stated in the contract.

Step-by-step explanation:

If a liability claim goes to trial, and the court awards a judgment that exceeds policy limits, the necessary party responsible for paying the excess award is generally C. The insured/defendant. This is because the insurer's liability is restricted to the policy limits, and they are not obliged to cover amounts that go beyond those limits unless there is a provision for excess coverage or umbrella coverage which can be the case in some insurance contracts. In such cases without additional coverage, the defendant would be responsible for the excess amount.

Juries in civil cases can recommend the amount of damages to be awarded, which may exceed the policy limits of the accused party's insurance coverage. Moreover, the Seventh Amendment ensures that a trial's facts, once decided by a jury, are not re-examined, thereby underscoring the importance of the jury's role in these determinations. However, the insured can appeal the case to a higher court if desired, but this does not absolve their immediate responsibility concerning the awarded damages.