General Information

Sources of Recovery and Related Issues

There are often several sources of recovery available to injured people. Some of these sources of recovery are unknown to the general public, or create subrogation issues for the recipient. If you have a pending claim, and need assistance, I encourage you to contact me regarding the specific issues in your case. There is no charge for a telephone consultation. 817-803-3898

Limits

The minimal amount of coverage for the average Texas driver is $25,000 per person, and no more than $50,000 for any one accident. This type of coverage is called a 25/50 policy. The best way to explain the two coverage levels is by example:

If a school bus full of children were involved in an accident with an average driver, and only one child were hurt, that child could collect up to $25,000.00 from the 25/50 policy. If 30 children were injured, they collectively could not collect more than $50,000, and no one individual could get more than $25,000.

As you can see, there may not be enough money for all possible claimants in the school bus example above. This is referred to as a "limits problem." The limits problem can arise in multiple car collisions, or in collisions where there are numerous passengers.

There are larger policies available starting at 50/100 policies and higher, although these are much less common.

Commercial policies are written for vehicles used in business. These policies are typically much higher than most standard driver policies. The higher figure is to protect the business since they have more assets at risk than the average driver. Examples of commercial policies are 18-wheeled tractor trailers, cement mixers, delivery drivers, and drivers of corporate fleet vehicles.

Some companies elect not to have insurance at all and "self-insure." This means they are essentially making the assets of their business open to collection in an adverse verdict.

Order of Settlement

Typically, the property damage portions of a claim settle first, and very quickly. After the treatment phase of an accident is over, negotiation of the bodily injury case begins.

In cases where there is a "limits problem," the adjuster is not required to settle the cases in any order, or to make sure that any money is left over for the last claimant to file. As a result, even though the last claimant might have the worst injuries, it is possible that all the money available to settle an accident could be given to other claimants before the last claimant has even filed their claim.

Stacking Policies

Sometimes there are multiple policies that can cover an accident. In these cases, there is a manner of applying these policies that must be used up first, before the second policy comes into play. This happens very often in cases where a passenger has personal injury protection under their own policy and under the policy of the driver of the car they were riding with. It also happens in cases where a commercial entity might have a policy to cover a specific amount of liability and an umbrella policy for any damages that go over the primary limit. Care must be given to make sure that policies are collected in the right order, and following the proper procedure to prevent jeopardizing other sources of recovery.

Personal Injury Protection

Personal Injury protection (PIP) is often referred to as "no-fault" insurance. In essence, this is a fund available to a person covered, up to the limits of the policy, to cover medical expenses and lost wages. PIP is available to every passenger in a covered vehicle, and often to every member of a household if they are injured in somebody else’s vehicle. As a result, it is possible to recover from more than one PIP policy.

Standard Coverage

In Texas, every policy sold is required to offer Personal Injury Protection, unless it is specifically waived by the person buying the policy.

Amount and Purpose

The base level of PIP is $2,500, although I have seen much greater amounts in some cases. The only things that can be covered by a PIP claim are medical bills and lost wages.

Double Recovery

PIP is practically the only way to have a "double recovery" in Texas. In almost every other instance where an insurer pays a claimant, and a third party insurer makes payment as well, the first insurer has a right to subrogate (collect back) what it paid out in benefits. PIP is not subject to subrogation, and you can collect your medical bills from your PIP carrier and the defendant’s insurance without having to give the PIP money back.

Will your Rates Increase?

The number one worry of people I discuss PIP claims with is if their rates will go up as a result of the PIP claim. By law, Texas insurers cannot raise your rates solely because of a PIP claim. I also point out to my clients that if their rates go up, it is doubtful their rates will go up by a sum anywhere near the base PIP coverage of $2,500.

Medical Pay

Medical Pay, or Med-Pay, is almost identical to PIP, except that Med-Pay creates a right of subrogation for the auto insurer. That means you can collect your med-pay, but if you ever recover more money in the accident, you have to pay your auto insurance company back. I don’t know why anyone would elect med-pay over PIP. Med-pay is cheaper than PIP, but PIP is pretty affordable to start with.

Under-Insured Motorist/Uninsured Motorists

Under-Insured Motorist and Uninsured Motorist policies (UIM) are in essence only one policy of coverage, but they get treated differently as to what triggers the application of coverage. Uninsured Motorist coverage applies when the person who caused the accident has no coverage. Under-Insured Motorist coverage applies when the person causing the accident has insurance, but not enough to cover all the damages created by the accident.

Standard Coverage

Just like PIP, Texas law requires all insurers to offer UIM/UM with all polices, but the buyer can specifically waive coverage.

Amount and Offsets

UIM/UM is offered in rates much like a standard liability policy, with the lowest rate being 20/40. Coverage ranges up from there.

To collect under this type of coverage, the claimant must first prove there was no insurance, or not enough insurance for the person at fault in the accident. When there is no insurance, proof is rather easy, in the form of a denial letter from the defendant’s former insurer, or the defendant’s conviction for failing to provide proof of financial responsibility. In cases of under-insured coverage, the proof becomes a larger issue.

In an under-insured case, the first step is to get an offer for the limit of coverage from the defendant’s insurance company with proof of that coverage limit (usually a certificate of coverage). The under-insured claimant must get permission from their carrier to accept the defendant insurance company’s offer. Once permission is granted, the claimant can accept the offer from the defendant company and present their claim to the under-insured carrier.

The under-insured carrier gets to offset any sums paid under PIP or Med-Pay as credit toward anything they might be required to pay. After the offsets, they get the same right as the defendant carrier did to challenge the reasonable and necessary nature of the bills and treatment. The under-insured carrier is then obligated to pay what is necessary to make up the difference of what the defendant’s coverage did not pay.

The only time an under-insured claimant can avoid the offsets mentioned above is when their injuries are such that the underinsured coverage is still not enough to compensate the injury. For example, if a person lost both legs in an accident, and the defendant only had $20,000 in coverage, it is unfair to let the under-insured carrier deduct $2,500 in PIP before it tendered its $20,000 UIM limit. After all, was $40,000 ever enough to compensate the claimant for losing both legs?

Will your Rates Increase?

The number one worry of people I discuss UIM claims with is if their rates will go up as a result of the UIM claim. I always point out to my clients that if their rates go up, it is doubtful their rates will go up by a sum anywhere near the coverage of their UIM.

Crime Victims Fund and Restitution

A shocking truth: when a person causes and accident in the process of a crime, or as an intentional act (road rage), their insurance does not cover the claim. The illegal activity invalidates their policy, making them an uninsured driver. When this happens, hopefully the injured party has uninsured motorist coverage. If they don’t, the only two sources of recovery left are the defendant himself, and the Crime Victims’ Compensation Fund.

The crime victim’s fund covers medical expenses. I encourage you to visit their website at http://www.oag.state.tx.us/victims/cvc.shtml.

In addition to the Crime Victims’ Compensation Fund, the state can order the defendant to pay restitution. Since these individuals often do not have good jobs or assets, restitution is a long shot.

Watch Out for Liens!

Health Liens

If an emergency room or ambulance treated you within thirty-six hours of an accident, they have an automatic lien on your case to be paid back from any source from which you recover compensation. Adjusters will not tell you they plan to put a lien holder on a check until you receive it. The discovery that the amount you settled for might not be what you get to keep shocks many unrepresented victims.

Super Liens (Medicare, Medicaid, Workers’ Compensation, and ERISA)

Governmentally protected liens have the greatest power to affect your case. Some of these liens can take not only from any settlement you have with the person who caused your accident, but your own insurance policy as well. Dealing with governmental liens require a strong knowledge of the recovery statutes in play, and determining if there is a way to get around the lien holder’s rights.

If there are going to be liens on your case, don’t try to work your settlement alone. Hire an attorney who can help verify what type of lien you are dealing with, and just how far they can reach into the money coming to you.