Car Wrecks — Auto Insurance Basics

Many times, how we proceed in a case and the value of the case are governed by the amount and type of insurance available.  Thus, it’s important to know some basic information about auto insurance so you can understand how those decisions are being made.

Keep in mind that this is basic information.  There are a number of complex issues within each one of these areas.  For example, I’ve spoken around the state to lawyers regarding issues with uninsured/underinsured motorist coverage, one of the areas below.  Lawyers could listen to day long seminars (maybe even staying awake) on each of these areas because there are so many intricacies that affect claims.  If you have questions, ask your lawyer about it.

WHO IS COVERED:

When you’re hit by someone, you need to know whether the person driving the car is covered by the insurance on the car.

Generally, a person’s automobile insurance covers that person, regardless of whether they are driving their car or someone else’s car, and anyone who is using that person’s car with that person’s permission.  For example, if Mr. Smith has an insurance policy covering his Ford Fiesta, the insurance would protect Mr. Smith while he was driving the Fiesta or any other car.  It would also cover anyone else driving the Fiesta as long as they have Mr. Smith’s permission to drive the car.

There are some policies that exclude particular people from coverage.  For example, if Mr. Smith had a son that had a bad driving record, the policy could specifically provide that the insurance was not covering Mr. Smith’s son.  These types of provisions can be especially troublesome when the other driver in your wreck has a low-cost policy, many of which have long lists of people who might normally be covered but who are excluded under the particular policy.

These coverage questions are particularly important when the driver of the car isn’t the owner.  One potential benefit in such a situation is that it might open up the possibility of two policy limits (one for the policy covering the owner of the car and one for the policy that the driver bought to cover his/her own car).  The importance of policy limits are explained below.

POLICY LIMITS:

Every insurance policy has a maximum amount that the insurance company will be required to pay, regardless of the severity of the injuries suffered by people in the wreck.  This maximum amount is referred to as the “policy limits.”

In most instances, you will see or hear policy limits referred to with two numbers — the per person and per occurrence limits.  For example, current law requires Texas drivers to carry insurance with limits of at least $30,000 per person and $60,000 per occurrence.

The first part of that is fairly easy to understand — in an example like that, the most the insurance company could be required to pay any single person in a wreck is $30,000.

The second part is more tricky.  The “per occurrence” limit is that maximum that the insurance company could be required to pay in total, regardless of the number of people injured in a wreck.

For example, if two people are injured in a wreck, the insurance company couldn’t be forced to pay either of them $30,000 and couldn’t be forced to pay a total to them of more than $60,000.

This applies regardless of the number of people hurt.  If someone with a $30,000/$60,000 policy causes a ten car pile-up that injures fifteen people, the insurance company is not required to pay more than $60,000 in total to all of the injured people.

While $30,000/$60,000 is the minimum allowed by law, those amounts may increase.  It is not unusual to find policies that are $50,000/$100,000 policies or even $100,000/$300,000 policies.  But policies much higher than that are very rare except in cases involving commercial vehicles.

PERSONAL INJURY PROTECTION (PIP)/MEDICAL PAYMENTS (MED-PAY):

These are two coverages that you might have purchased on your own auto insurance.

PIP can cover you two ways.  If you are in a car whose policy has PIP, then you are eligible for the PIP benefits if you’re in a wreck while in that car.  Similarly, if you own a car and your insurance has PIP coverage, then you qualify for those benefits whenever you’re in a wreck no matter whose vehicle you are in.

PIP will pay for your medical expenses and 80% of your lost wages up to the policy limits of the policy.

One benefit of PIP is that, unlike health insurance or many other types of insurance, you don’t have to reimburse the insurance company if you make a recovery from the person who hit you or some other third party.

Med-Pay is a poor substitute for PIP.  It only covers medical expenses (and not lost wages), and you do have to pay your insurance company back for your Med-Pay benefits if you make a recovery from someone else.

As a lawyer, I think PIP is a very important insurance.  I’ve seen a number of clients who find themselves unable to work due to a wreck, and their PIP benefits are the only thing that help them pay their bills while their case progresses. It is not expensive so I urge everyone who can afford it to buy it.

UNINSURED/UNDERINSURED MOTORIST COVERAGE:

This is another type of coverage that you buy when you purchase your own auto insurance.  It protects you if you’re in a wreck and the driver who causes the wreck either doesn’t have insurance or doesn’t have enough insurance.

If you bought UM/UIM insurance for your car, it covers you and anyone in your car when a wreck happens.  It also covers you if you’re in any type of auto accident, whether you’re in your car or not.  This includes providing coverage if you’re hit by a driver while you’re a pedestrian, riding a bicycle, or even sitting on your front porch.

Like PIP, I think it’s critical that you purchase UM/UIM insurance.  Despite laws to the contrary, there are a significant number of drivers out there who don’t have any insurance at all.  And when drivers have insurance, most only carry the state minimum of $30,000.00.  If you’re hurt and need even minor surgery, that $30,000.00 won’t even be enough to reimburse your health insurance company for your medical expenses.  You pay a lot of money for insurance to protect others; you should spend the money to protect yourself also.

Perlmutter & Schuelke, LLP maintains offices in Austin, Texas. However, our attorneys and lawyers represent clients throughout the state of Texas, including Dallas, Houston, San Antonio, Forth Worth, El Paso, New Braunfels, San Marcos, Kyle, Buda, Round Rock, Georgetown, Lockhart, Bastrop, Elgin, Manor, Brenham, Cedar Park, Burnet, Marble Falls, Temple and Killeen. By Brooks Schuelke

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