If a request for disclosure of Liability limits has been made, your insurer has the obligation to tell you and it is your decision to make if you allow the disclosure of your limits in the state of California. Whether disclosing will be an advantage or disadvantage really depends upon your specific situation.
Generally, when the other party's insurance company requests your policy limits so that they will know how much money is available for their insured(s) medical treatment or property damage repairs. Your insurer will only release the information if you agree to it in California since you have the right to allow your car insurance company to disclose your policy limits per California Insurance Code (CIC) 791.13 as you mentioned.
CIC 791.13 starts off by saying "An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless the disclosure is with the written authorization of the individual, and meets either of the conditions specified here in the law." You can go on to read the rest of the law to find out about the conditions since it may help you with your decision.
It appears in your situation the party you hit in an accident, or their car insurance company, is requesting your Liability limits information. If you do allow the disclosure of this information it will be your insurer that provides the limits to the other party. If you do not allow them to disclose this information the other party will not have access to the amount of coverage they are able to file against and in the event of inadequate coverage it may lead to subrogation/lawsuits against you in the event of a claim that goes over your limits.
As for advantages and disadvantages to disclosing this information, some believe that if you have high limits and you disclose them, the claimants may know there is more money and may treat with a doctor for longer expecting a higher claim payment. On the other hand, if you disclose low limits the other party may realize there is only so much available and not continue racking up medical expenses that they may not be reimbursed for.
Keep in mind that if the other party really intends on finding out your Liability limits they can by suing you or your insurance company and getting a subpoena for the details of your car insurance policy.
We asked the insurance regulator for California for their advice on the topic and though they do not give legal advice the CA Department of Insurance did tell us that if this is a regular, minor vehicle accident there typically is no reason to disclose the limits. If however this was a very serious accident involving serious injury or death it is may be appropriate to alert the claimant to the availability of high limits or low limits to avoid litigation.
In general, disclosure may serve your best interest when it aids in settlement discussions and prevents litigation against you. Your Liability limits may be an essential part of evaluating whether or not the other party will sue you.
Disclosing your limits may discourage a seriously injured victim from demanding more than your policy limits since they would have to do so in court normally. On the flip side, disclosing higher limits may encourage a person to continue costly medical visits and ask for more monies for pain and suffering for their injuries.
In the state of California you can decide whether to allow your car insurance company to disclose your Liability limits or not to other parties and if you are not certain of what you should do, we advise you to discuss your specific situation with your auto insurance agent or adjuster. If you were at-fault in a serious accident you may also want to seek legal counsel to discuss the situation of what is in your best interest, to disclose your limits or not.
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