What Is The Difference Between A “Claimant” And An “Insured”?

Words matter. Our firm reviews as many as two to three dozen new claim files/catastrophic injury cases every day. We review these files for many reasons, but primarily to determine if the loss/injury was the result of negligence on the part of some “third party” other than the insured. This “third party” is also known as a “tortfeasor” – an individual or corporation which commits a wrongful act or fails to act in a prudent manner, thereby causing injury or damage to one of our clients’ insureds for which the law provides a legal right on the part of the insured or our insurer (via subrogation) to seek relief and damages by way of a civil lawsuit. After this lawsuit is filed, the tortfeasor is known as a “defendant” and the insured (or subrogated insurer) becomes a “plaintiff.”

There is an important difference between the insured/plaintiff and the tortfeasor/defendant in a subrogation lawsuit. This difference reflects both who was at fault in causing the accident and who is making a “claim.” An “insured”, of course, is a person or organization covered by insurance. In the context of an insurance “claim” file, therefore, the insured is almost always the one “making a claim.” One of the most common mistakes in terminology we see in insurance claim files (occurring in approximately half of the files we review) is the inappropriate reference to the third-party tortfeasor as the “claimant.”

The Free Dictionary defines a “claimant” as “a person who makes a claim.” International Risk Management Institute (IRMI) defines “claimant” as follows: “The person making a claim. Use of the word ‘claimant’ usually denotes that the person has not yet filed a lawsuit. The Insurance Industry Glossary defines “claimant” as “The party making a claim under an insurance policy. The claimant may be the insured. Under liability policies, the claimant is a third party.” No matter which definition you use, a “claimant” is somebody making a claim – not somebody against whom a claim will be made.

Upon filing a lawsuit, the claimant becomes a plaintiff, but the terms are often used interchangeably.” The industry’s seemingly unbreakable habit of referring to the tortfeasor or defendant as the “claimant” isn’t fatal to the handling of a claim or adjusting of a loss, but it isn’t accurate and its use doesn’t reflect the best claims handling practice. It also opens up a claim file to possible misinterpretation and mistakes. So widespread is this usage of the term that it has almost become institutionalized out of habit – even among experienced and tenured claims professionals. For that reason, I felt it worthy of highlighting this rather trivial, but interesting, phenomenon in this article.

The intersection between law enforcement and insurance has resulted in the inappropriate use of the term “claimant” metastasizing and bleeding over into the intersection between law enforcement and insurance. Quite often, the “OV” (“other vehicle”) is referred to as the “CV” (“claimant’s vehicle”) by investigators and even law enforcement officers or security personnel, which can make things somewhat confusing when reviewing incident reports within claim files for subrogation evaluation purposes.

Under old English law, the term “Acts of the Claimant” was an ancestor of the more common term, “contributory negligence.” In the normal course of events, an actor is liable if they owed a duty of care, breached that duty, and either caused loss or damage to the claimant or exposed the claimant to a risk of loss or damage. However, a negligent defendant will not be liable for any loss or damage subsequently sustained by the claimant, if the claimant acted unreasonably in responding to the situation. This is a matter for the courts to weigh on the facts of each case. Pure contributory negligence barred any recovery by the claimant (plaintiff) under English common law. Today, only four (4) states and the District of Columbia recognize this antiquated Pure Contributory Negligence Rule, including Alabama, Maryland, North Carolina, and Virginia. The pure contributory negligence defense has been criticized for being too harsh on the plaintiff, because even the slightest amount of contributory negligence by the plaintiff which contributes to an accident bars all recovery no matter how egregiously at-fault the defendant might be.

More modern times have transformed the contributory negligence bar into something known as “comparative fault.” The term “comparative fault” refers to a system of apportioning damages between negligent parties based on their proportionate shares of fault. Under a comparative fault system, a plaintiff’s negligence will not bar recovery in states that employ the harsh Pure Contributory Negligence Rule, but it will reduce the amount of damages the plaintiff can recover based on the plaintiff’s percentage of fault.

The Pure Comparative Fault Rule allows a damaged party to recover even if it is 99% at fault, although the recovery is reduced by the damaged party’s degree of fault. The pure comparative fault system has been criticized for allowing a plaintiff who is primarily at fault to recover from a lesser-at-fault defendant some portion of its damages. Twelve (12) states recognize the Pure Comparative Fault Rule, including Alaska, Arizona, California, Florida, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, New York, Rhode Island, and Washington. The perceived unfairness with the Pure Comparative Fault Rule is that a defendant may be liable to a claimant/plaintiff even though only 1% at fault and where the claimant/plaintiff was 99% responsible for carelessly causing his/her own injuries or damages. As a result, we have thirty-three (33) states which now adhere to something known as Modified Comparative Fault.

Under Modified Comparative Fault System, each party is held responsible for damages in proportion to their own percentage of fault, unless the plaintiff’s negligence reaches a certain designated percentage (e.g., 50% or 51%). If the plaintiff’s own negligence reaches this percentage bar, then the plaintiff cannot recover any damages. There are competing schools of thought in the 33 states that recognize the Modified Comparative Fault Rule. This system has been questioned because of the complications resulting from multiple at-fault parties and the confusion it causes for juries. Ten (10) states follow the 50% Bar Rule, meaning a damaged party cannot recover if it is 50% or more at fault, but if it is 49% or less at fault, it can recover, although its recovery is reduced by its degree of fault. Twenty-three (23) states follow the 51% Bar Rule, under which a damaged party cannot recover if it is 51% or more at fault, but can recover if it is 50% or less at fault, the recovery would be reduced by its degree of fault.

The lesson in contributory negligence and comparative fault relates to the misuse of the term “claimant”, because it is important to understand that in today’s civil litigation, the tortfeasor/defendant might have a counter-claim to bring against the plaintiff, which would transform the tortfeasor into a “claimant” – although under such circumstances he/she should be referred to as a “counter-claimant” to be legally accurate and avoid confusion.

An insured is always a “claimant” in the context of an insurance claims file. He or she is making a claim. Referring to the third-party tortfeasor/defendant as a claimant is not only confusing, it is almost always wrong. The third-party tortfeasor/defendant may be an insured of some CGL policy – hopefully so for purposes of insurance subrogation – but rarely is he/she properly referred to as a “claimant.” Mark Twain once said that “Nothing so needs reforming as other people’s habits.” Referring to a tortfeasor as a “claimant” isn’t at the top of the list of bad habits within the insurance industry, but it might top the list of the habits most difficult to change.

To view a chart on “Contributory Negligence/Comparative Fault Laws In All 50 States”, click HERE. This chart breaks down the comparative fault/negligence systems for the 51 U.S. jurisdictions. It is one of our most popular charts on our website’s Subrogation Charts page.

If you should have any questions regarding this article or subrogation in general, please contact Gary Wickert at [email protected].

Gary L. Wickert

Gary L. Wickert is an insurance trial lawyer and partner with the law firm of Matthiesen, Wickert & Lehrer, S.C. Gary has nearly four decades of litigation experience and is regarded as one of the world’s leading experts on insurance subrogation. He is the author of several subrogation books and legal treatises and a national and international speaker and lecturer on subrogation and motivational topics.