Expert: webfoot - 9/20/2007

Question
QUESTION: Hi, our LLC company is currently producing a feature film and one of our rented trucks was involved in an accident, where the other party was driving a Vespa scooter with a passenger. Vespa scooter got damaged and the riders got injured (not sure how seriously, but nothing life threatening). Police report states following: Truck (our) driver stated that he is not sure whether it was green or red light when he drove through the intersection heading West bound.  Vespa driver states that he was passing through green light and the truck didn't yield the right of way.  Vespa scooter rammed into the side of the truck.  Vespa driver failed to produce driver's license.  From what I know from our truck driver, Vespa diver was taken to hospital.

We are a very small production but have general liability insurance which came with non owned/hired vehicle liability insurance.  I want to know if we are protected against law suits or claims, if Vespa driver decides to sue.  Truck rental agency told us that it might get very ugly, since the Vespa driver might sue the production company, truck rental place and the truck driver for several million dollars.  How feasible is this?  Or what would happen in this case and what can we do to protect ourselves.  We basically have no money to hire a lawyer and handle extended court cases, etc.  In our case, would the LLC company be sued or we as owners of the company will be sued?  Neither the company or us have enough money to satisfy any law suits.

Thank you so much in advance.  Really appreciate your opinion.


ANSWER: Assuming that your general liability insurance does afford coverage for this loss, the policy limits will likely take care of this.  The truck rental agency may also be targeted, but they carry insurance as well.

An attorney is only going to pursue valid insurance policies.  They won't generally take contingency cases unless there is some money somewhere.  Unless your driver were drunk or running from the police or something, a minor injury loss would never entitle someone to millions of dollars.

Make sure that you promptly report this to your insurer so they may begin their investigation.


Good luck!

---------- FOLLOW-UP ----------

QUESTION: Hi, sorry to bug you again with the question, but we just found out that we are not covered with non owned/hired vehicle liability insurance.  Also, we only had collision insurance with truck rental, so I guess they won't cover anything as well.  What might happen?  What's going to happen personally to the people in charge of LLC?  Would at least LLC status protect us personally?  What's the worst can happen?



Thank you,  RJ

Answer
In most states, the owner of any vehicle is required to have liability insurance or they cannot apply for a license plate.    Vehicle rental companies are not excluded.  In fact, most personal auto policies specifically exclude large trucks from coverage.

Liability generally follows the vehicle owner, not the driver.   When I owned my gas station, there was a U-haul center next door.  My building was old and the awning wasn't very tall.  Even though we had big signs overhead, someone in a U-haul would manage to run into the building about 4 times a year.  Every one of the damage claims were handled by U-Haul's insurance company,,,not the drivers'.

Do keep in mind though that I can only speak to the liability in my state, which is GA.  Anyone is free to sue your LLC in any state, but like I said in the prior email, most attorneys are going to follow the money.  As far as how much your LLC shelters you, that is not a question that I'm qualified to answer.  It really has nothing to do with auto insurance.