Before discussing the types of insurance liability coverage, let’s discuss how to read an automobile insurance policy. In the example above, the first number refers to what anyone person can recover.
So if someone kills you in a car accident while they were driving a 1980 Chevrolet insured for the state minimum in Kentucky and Indiana of $25,000 per person, their insurance company is only going to be responsible for $25,000 of your damages.
It does not matter whether you worked at McDonald’s making minimum wage or were a brilliant hand surgeon. In the instance I described, the insurance company for this at-fault driver is going to say sorry for your luck and if you want any more than this $25,000, you can sue the at-fault driver personally and try to collect against any assets he might own.
Now let me explain something to you. In very, very rare circumstances will an injury lawyer be willing to sue an at-fault driver over and above his insurance policy. Why? Because chances are the at-fault driver has nothing to collect. When you file a lawsuit you are trying to obtain a Judgment against that person. A Judgment is a piece of paper that says they owe you money, nothing more.
If someone has a house that you can foreclose on a bank account you can garnish, then it can be powerful means of collecting the money they owe you. 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. If someone has a lot of assets, they have a lot of insurance coverage to protect those assets. If they have just enough insurance coverage to lawfully operate a motor vehicle on the road, chances are they don’t own a house and they are 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.
In the instance above, the second number, $50,000, refers to the maximum the insurance carrier for the at-fault driver will pay out no matter how many people are injured. So if you are driving your car with 6 passengers in it and, it means that if even there were 100 people injured by this Chevrolet, the insurance carrier for the at-fault driver is still only responsible for $50,000.
To make matters worse, the situation I just described is called an Interpleader. In essence, it means that the 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”.
Interpleader is a cause of action wherein the insurance company is seeking permission to deposit the $50,000 with the Court, allow the Court to figure out how to divide the funds and allow the insurance company to 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..
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 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.