Understanding Policy Limits, the Coots Procedure, and Underinsured Motorist Claims in Kentucky
One of the most common misunderstandings I see in serious injury claims arising from car accidents is this:
“If the other driver’s insurance offers their policy limits, doesn’t that mean they’re off the hook?”
The short answer is no—and in many cases, accepting that offer is only step one, not the end of the road.
Let me explain how this works in plain English.
The Reality of Insurance Limits in Kentucky
Kentucky law does not require drivers to carry enough insurance to fully compensate someone they seriously injure.
In fact:
- The minimum required liability coverage in Kentucky is $25,000 per person
- Many drivers carry $50,000 or $100,000, but no more
- There is no law requiring them to have coverage sufficient to pay:
- Medical bills
- Lost wages
- Pain and suffering
- Long-term or permanent injuries
So, when an insurance company offers its policy limits, it doesn’t mean your claim is worth only that amount, but rather,
That is the most money available from that insurance policy.
Why Suing the At-Fault Driver Personally, beyond their insurance coverage, is typically Not Worth It!
Clients often ask:
“Why don’t we just sue the driver for more?”
Here’s the hard truth:
Most people do not have collectible assets beyond their insurance. You can spend years in litigation, win a judgment, and still collect nothing, while incurring litigation expenses that can decrease your overall recovery.
That’s why Kentucky law provides for underinsured motorist coverage.
The Coots Procedure (KRS 304.39-320)
Kentucky allows injured people to pursue underinsured motorist (UIM) benefits from their own insurance company when the at-fault driver doesn’t have enough coverage.
But there’s a required step first, known as the Coots procedure.
Here’s what it does:
- Preserves your right to pursue UIM benefits
- Prevents your insurance company from claiming you “gave up” their rights
- Allows the at-fault insurer’s policy limits to be accepted without killing the case
In simple terms:
We notify your insurance company of the settlement offer and give them the chance to protect their interests before we accept it. Once that’s done, the focus shifts to your underinsured motorist claim; essentially, by pursuing your underinsured motorist claim, you have switched the risk that the at-fault driver has no assets to collect beyond his insurance coverage to your own insurance company. On Coots, know that the steps for a proper Coots procedure are outlined in KRS 304.39-320, and they need to be followed to the letter, or you may lose your right to recover underinsured motorist benefits.
How Medical Bills and Health Insurance Really Work
Another big concern clients have is getting their medical bills paid, especially when surgery is involved.
Here’s how it typically plays out:
- Health insurance pays the medical providers, not you
- Health insurance then asserts a lien against the settlement
- Those liens are often negotiated down
- Example: a $65,000 hospital bill may be satisfied for $20,000 (because of the contract that health insurance has with the hospital)
- We can also pursue Personal Injury Protection (PIP) benefits (up to $10,000 in Kentucky) to further reduce what comes out of the settlement
The goal is simple:
Reduce medical liens so more money ends up in the client’s pocket.
Why a Policy Limits Offer Can Be a Good Thing
It may not feel like it at first, but when the at-fault insurer offers their full limits, it supports the arguments that:
- The injuries exceed available liability coverage
- The injury claim from the car accident qualifies for underinsured motorist benefits
- Additional compensation is owed under the client’s own automobile insurance policy
The Big Picture: What This Means for the Injured Client
Every case is different, but the objective is always the same:
- Pay medical bills through no-fault and health insurance
- Reduce liens, which means more money in a client’s net personal injury settlement
- Preserve all available claims, including those against a client’s own automobile insurance
A policy limit does not mean the insurance company “wins.”
It often means the case is just entering its most important phase, i.e., the first stages of actually resolving the injury claim.
Final Thought
Insurance companies love it when people think:
“That’s all there is.”
Kentucky law says otherwise.
If you’ve been seriously injured and the other driver’s insurance “maxes out,” that doesn’t end your claim—it opens the door to the next one.
And that’s where having an attorney who understands procedures like Coots and underinsured motorist claims makes all the difference. That’s why you can always reach me on my cell phone, 502-609-7657. Wishing you safe travels, but if things go wrong, you know how to reach me.
All the best!
Attorney Jim Desmond
502-609-7657