Before discussing the types of insurance liability coverage, let’s discuss how to read an automobile insurance policy. When your company says that you have $25,000/$50,000 of insurance coverage, what they are really saying is that the maximum any one person can recover is $25,000 per person and no matter how many people are involved in this car wreck, they will not pay out more than $50,000.
So if a drunk driver is insured with Safe Auto for $25,000/$50,000 of liability coverage and this drunk driver sends you to the hospital wherein you incur $45,000 in medical expenses because of a three-day hospital stay, Safe Auto is still only going to pay out a maximum of $25,000 per person. In other words, when you cause a car wreck, you can be legally responsible for all the damages you cause the injured party. So you can get a judgment against the drunk driver saying he owes you the $45,000 in medical expenses and say, for example, an equal amount, $45,000, for your pain and suffering claim. Nevertheless, recall that the drunk driver only purchased $25,000 in insurance coverage from Safe Auto. As a result, no matter how much damage the drunk driver causes, Safe Auto is still only going to be responsible for a maximum of $25,000; even though you have a $90,000 judgment against the drunk driver.
In essence, a judgment is a piece of paper that says someone owes you money. For that judgment to be worth money, the drunk driver would have to had enough insurance coverage to satisfy that judgment or enough assets, (e.g. a house, a business, bank accounts), wherein collection procedures (e.g. garnishments, foreclosures) can yield money.
So YES, the law is unfair in this instance!
It does not matter whether you worked at McDonald’s making minimum wage or were a brilliant hand surgeon. Safe Auto is going to only be responsible for $25,000 in the example I am using. This is why it is so important to look for many layers of insurance coverage, through many different sources, that might provide insurance coverage to satisfy your personal injury claim. http://www.attorneydesmond.com/finding-layers-of-insurance-coverage.
SUING AN AT-FAULT DRIVER BEYOND THEIR INSURANCE LIMIT IS POSSIBLE.
Now let me explain something to you. In very, very rare circumstances, an injury lawyer will sue an at-fault driver over and above his insurance policy. As discussed above, from a legal standpoint, you are responsible for all the injuries or damages arising from a car wreck that you caused. However, from a practical standpoint, the question is whether the potential recovery is worth the extra litigation costs and attorney fees to justify prolonged litigation.
Why? Because chances are the at-fault driver has nothing to collect. If I have a lot of wealth, I generally have a lot of insurance to protect that wealth. If I don’t have a lot of wealth, why would I spend a lot of money on insurance to protect assets I don’t have.
The key to whether you can collect on a judgment is whether the at-fault party has enough assets to collect against. If someone has a house that you can foreclose on a bank account or a bank account you can garnish, then collection procedures can result in money that will satisfy your judgment. On the other hand, if someone is driving around with just $25,000 in insurance liability coverage, chances are they have nothing to collect that judgment from. A lot of insurance coverage tends to mean a lot of assets to protect. If a drunk driver has just enough insurance coverage to lawfully operate a motor vehicle on the road, chances are he doesn’t own a house and he is just getting by each week on their salary. Further, if your Judgment is just one of several that they have against them, they are not going to be intimidated by your collections efforts.
The example above is just an example. If you were smart enough to have underinsured motorist coverage,http://www.attorneydesmond.com/why-is-underinsured-motorist-insurance-important/, on your car insurance or your motorcycle, you might not need to even sue the drunk driver beyond his insurance limits. However, this is something I can only answer through a face to face consultation wherein I become familiar with the facts of your car wreck.
I am going to explain below a legal term called an Interpleader but if you are facing such a situation, call a personal injury lawyer. Interpleader is too complicated to handle without solid, legal representation.
In the instance above, the second number, $50,000, refers to the maximum Safe Auto will pay on behalf of the drunk driver no matter how many people are injured. So if you are driving your car with your entire family in it and the car wreck also involved two more vehicle packed with passengers, Safe Auto is still only responsible for a total of $50,000; even though the value of your personal injury claims could be five times that amount.
I just described is called an Interpleader. In essence, it means that the value of the personal injury claims exceed the applicable insurance and the insurance company does not know how to distribute the insurance proceeds among the claimants. By law, an insurance carrier cannot settle one of the personal injury claims unless it can settle all of them for the $50,000 or less. So usually the insurance carrier will file a lawsuit, known as an “Interpleader”. In essence, they are asking the Court to figure out how to divide this $50,000 among these personal injury claims.
The insurance company is essentially seeking permission to deposit the $50,000 with the Court, allow the Court to figure out how to divide the funds so it, the insurance company, can be released from further liability. The problem for you is that this Interpleader process results delays the settlement of your personal injury claim at a time wherein you are already probably experiencing financial hardships from being off work. Like I said above, there is a way to protect yourself. Visit my Underinsured Motorist Coverage for a complete discussion on this type of insurance and my Uninsured Motorist page for an explanation of that part of your auto insurance coverage..
The Personal Injury Settlement is Not Enough!
To bring this issue of Interpleader home, I had a personal injury case settle the other day wherein I had represented my client previously as well. As much as we had discussed at length the particulars of his personal injury claim, I had obtained his authority to accept the settlement offer for his personal injury claim. Nevertheless, it was clear that he did not understand why he was not receiving more money from his settlement. In this was an Interpleader case.
For my client’s car wreck, there were five people injured by one person, a.k.a. the torfeasor, who had the state minimum in insurance coverage, $25,000 per person and $50,000 per accident. This meant that while the tortfeasor’s insurance carrier, State Farm, was agreeing that their driver was 100% at fault for the car wreck and was willing to pay their entire policy limit of $50,000, the five people with personal injury claims had to agree on how to split the $50,000 in coverage. To make matters worse, all these individuals were represented by experienced personal injury lawyers and all of us were arguing that our client’s injury claim was worth more than the next guy’s claim.
If an agreement would not have been reached, the $50,000 would have been deposited with the Court, (the Interpleader part of the case), and a Judge, after hearing evidence, just as if the claims proceeded to trial against the tortfeasor, would have to decide how to split the insurance proceeds. Typically, this ends up being a lot of extra litigation expenses and unnecessary delay. So ultimately, State Farm hired their own attorney who negotiate settlements for each injury claim, to which all five claimants had to agree to, thereby resolving these claims in full.
So in this situation, are you, an injured person from a motor vehicle accident, just out of luck and required to take just what you can get? No! The best way to protect yourself in this situation is to have on your own automobile or motorcycle insurance policy underinsured motorist coverage. Had there been underinsured motorist coverage on my client’s vehicle, I could have agreed to the figure State Farm offered and then potentially recovered more funds from his own automobile insurance carrier. The fact that he would not have recovered the policy limit of $25,000 per person would NOT prevent him from making an underinsured motorist claim against his own automobile insurance.
So to take this example a little further, if my client had ample underinsured coverage on his own automobile insurance and there had been 30 people involved in this wreck, we could have settled his injury claim for $500, for example, and still have recovered more money from his underinsured motorist coverage. The benefit being to my client that he has the option of avoiding extensive litigation, over a limited pot of money, and instead could concentrate on prosecuting his claim against his own insurance carrier wherein there is ample insurance coverage. While I understand not everyone wants to use their own automobile insurance coverage for a wreck that they did not cause, my job as a personal injury lawyer is to give my client options so as to maximize their ability to recover on their personal injury claim. Once my client has their options explained to them, they can choose how they want to proceed. However, this option, created by the presence of underinsured coverage, is only available if you have this on your own automobile or motorcycle insurance before the wreck ever occurs. When a motor vehicle wreck happens, it is like a photograph is taken. Nothing can be taken out of or put in that photograph no matter how severely someone is injured.
Further, there is nothing in Kentucky or Indiana law that guarantees you the at-fault driver has enough insurance to pay your medical bills from a car wreck, much less your claim for pain and suffering. If your right arm has to be amputated because of the injuries you sustained in a motorcycle wreck and the at-fault driver worked for U.P.S., then the value of that personal injury claim probably exceeds $1,000,000. However, if you suffered that same injury and the at-fault driver was driving a 1980 Chevrolet, chances are they are insured by Safe Auto up to $25,000 per person and have no assets that make it worthwhile to sue them beyond their insurance coverage. The reality, as demonstrated by this example, is that the value of a personal injury claim really depends upon the amount of insurance coverage available to the injured party. Therefore, you, as a consumer, can protect yourself by creating an additional source of recovery by having at least $100,000 per person of underinsured motorist coverage on every automobile and/or motorcycle insurance policy in your household.
COVERAGE LIMITS FOR PROPERTY DAMAGE
Finally, the $10,000 in your “25,000/50,000/10,000 of Liability Coverage” refers to your insurance companies limit of responsibility for any damage you do for to the cars/property damage caused by the auto accident. So if you are driving a Mercedes Benz worth $80,000, the insurance company for the at-fault driver is only responsible for $10,000 of your property damage. In this instance, you would have to use your collision coverage to cover the value of your totaled automobile. http://www.attorneydesmond.com/insurance-totals-car/
In Kentucky, the statute for the state minimum amount of insurance liability coverage is contained in KRS 304.39-110. In Indiana, the statute is Indiana Code 9-25-4-5.
You have friends telling you to contact their attorney, insurance companies telling you don’t need a lawyer and twenty injury attorneys on television promising you checks.