Insurance Issues Archives

Finding Layers of Insurance Coverage

Throughout my legal career, I have handled a lot of car accidents and motorcycle wrecks wherein we could not recover the full value of my client’s personal injury claim. Why? Very simply, the value of a personal injury claim, from an automobile accident, depends in large part upon the insurance that is in place before the car wreck. This is true whether we are talking about your own car or motorcycle insurance or whether we are talking about the insurance on the at-fault driver.

Imagine for a second that insurance coverage is like baking a cake with several layers. Ideally, each layer leads to and is on top of the next layer. For a serious car wreck, the base of the cake is the liability insurance, the insurance on the at-fault driver. The next layer(s) is composed of your underinsured motorist coverage on your own automobile insurance policy. The icing is the end result from your personal injury. Motorcycle wrecks are a great illustration of this process and how a good personal injury lawyer may still not be able to recover the full value of your personal injury claim.

I have been working on a motorcycle wreck case wherein the client was hospitalized at the University of Louisville Hospital for over 30 days. As a result, the motorcyclist has medical expenses in the six-figure range. Yes, the client has health insurance and we will be using the health insurance of the motorcyclist to pay the medical bills and to reduce the medical bills to a lower amount. However, even the subrogation claim being asserted by the health plan, (a claim by the health plan to recover the medical expenses they have paid), exceeds the insurance coverage on the at-fault driver. For this case, the at-fault driver was insured for only $25,000 per person. In Kentucky and Indiana, this is the state minimum and a driver only needs to have as little as $25,000 per person in insurance coverage to lawfully operate an automobile.

So, I have been doing a lot of searching for other liability insurance that might apply to the negligence of the at-fault driver. I have ordered a copy of the title for the at-fault vehicle because the law provides that the insurance covering a vehicle is primary and the insurance covering the driver is secondary. In other words, I might find insurance on the vehicle or the driver or both.

For example, if I let you borrow my car, both of our insurance policies, you as a driver and me as the owner of the vehicle, could apply to the wreck. Yes, it is a long shot but considering the severe nature of my client’s injuries, I have to look in multiple places for multiple insurance policies.

This is worth reemphasizing. There is no issue as to the value of my client’s personal injury claim as fault for this motorcycle wreck is clearly on the automobile driver AND my client has over $100,000 in medical bills; much less considering his future treatment or lost wages. Yes, I can sue that at-fault driver and get a piece of paper, known as a judgment, that says the at-fault driver owes the full value of my client’s personal injury claim. However, judgments are a legal means of collecting a debt against someone’s assets through garnishments and foreclosures. If the at-fault driver does not have any significant assets, there is nothing to collect that judgment from. Moreover, unless the judgment involves punitive damages, the at-fault driver can bankrupt that judgment and make it disappear as if it never existed. This is why a good personal injury lawyer looks for underinsured motorist coverage. The problem being that the client, in this case the injured motorcyclist, has to have bought the underinsured coverage before the car wreck.

Many, many people incorrectly think that they do not need this coverage as they incorrectly think the at-fault driver is responsible for all the damages they have caused. Realistically, that is just not the case. So again, the value of the personal injury claim may be determined before the car wreck ever happens because it is at that time, all the liability insurance and underinsured motorist coverage is put in place.

For the motorcycle wreck I have been talking about, there was no underinsured motorist coverage on the motorcycle insurance policy. While the client had underinsured motorist coverage on an automobile insurance policy, that car insurance had two exclusions that made it inapplicable to the motorcycle accident.

First, it specifically excluded insurance coverage for two and three wheel vehicles, i.e. motorcycles and ATVs. Second, it excluded vehicles regularly owned and operated by the client BUT not listed on that insurance policy. In this case, the motorcycle was insured through another company and therefore, it was not listed on the automobile insurance policy.

So now, admittedly as a last resort, I am looking to the insurance policies of family members with whom my client has resided. To oversimplify things, you can have insurance coverage as someone who is listed on the insurance policy as a resident relative of the same household. The easiest example is to think about a 13-year old child that has divorced parents and lives with both his mother and father. Potentially, either his mother’s or father’s insurance policy could provide insurance benefits for a car accident even if the child was not in either parent’s vehicle.

On a final note, be careful about settling with one insurance policy and trying to pursue another. Depending upon what you sign, you could inadvertently release a claim against the driver’s insurance by settling with the company with that insures the motor vehicle. There are specific statutes, both in Kentucky and Indiana, that require certain procedures to be followed to preserve an underinsured motorist claim and BEFORE you settle with the liability carrier. If you don’t follow these procedures, your underinsured claim could be barred.

My job as a personal injury lawyer for this kind of motorcycle wreck is to find and collect from as much insurance as I can to maximize my client’s personal injury recovery. In addition, I have to minimize the subrogation claim of the health plan because every dollar the health plan recovers, is one less dollar my client is going to recover.

There’s one final point that I do hope you will think about. The value of a personal injury claim, unless you buy the correct insurance on your own motorcycle insurance before the wreck, depends upon luck. If the at-fault driver has a one-million-dollar insurance policy, you are in good shape. In contrast, if the at-fault driver is driving a 1980 Chevrolet, that same case with those same injuries is going to be worth a whole lot less.

When Insurance Totals Your Car

In a recent blog post I started talking about some of the issues that come up when your car is damaged in a car wreck. However, the one issue I did not get to is when the insurance company tells you that your vehicle is totaled or a total loss. So, what happens when insurance totals your car?

For example, assume you have just finished paying off your Ford Explorer that has a present, book value of $7,000 and because you have taken meticulous care of it over the years, you believe it should run for another 10 years or 100,000 miles. A drunk driver plows into the rear-end of your vehicle and pushes your Explorer into another large SUV causing your airbags to go off. Most likely, your Explorer will be a total loss as each airbag alone tends to cost about over $1,000 to replace.

In Kentucky and Indiana, an insurance company is required to total out a vehicle if the repair costs equal or 75% (in Kentucky) or 70% (in Indiana) of the value of the vehicle. This is a link to a website that describes what I am talking about and lists the percentages for each state, http://www.carinsurance.com/Articles/total-loss-thresholds.aspx.

The problem being that when a car is a total loss, the insurance company owes you the fair market value of the vehicle, not the replacement value.

Therefore, in my example, you could recover the $7,000 the Explorer was worth with some fees for taxes and titling the vehicle. The fact that it may cost you more money to replace that vehicle with something just as good, is irrelevant in the eyes of the law.

Yes, you can keep your vehicle if an accident totals your car. Nothing in the law requires you to turn over your vehicle to the insurance company. However, the insurance company will deduct whatever money they would have gotten from a junkyard for the Explorer. This is usually referred to as salvage value and it tends to run about 20% of the fair market value of the vehicle. So in the case of the Explorer, you could keep it but the insurance company would pay you approximately $5,600 instead and you would have to apply to your local County Clerk for a salvage title.

You have to check with the County Clerk as to the specifics required for a salvage title but, I can tell you that you have to turn in the license plate so the vehicle can not be driven while it is being fixed and a mechanic has to complete an affidavit as to the work done with the appropriate receipts for the parts purchased.

Typically, if insurance totals your car, unless you can fix the vehicle yourself, know a backyard mechanic who can do the repairs cheaply or drive the car ugly because the damage to the vehicle was mostly cosmetic, it is better to let the insurance company haul the car off.

Using Collision Coverage

As a personal injury lawyer, I preach a lot about getting your medical bills paid and recovering your claim for pain and suffering from the insurance company for the at-fault driver. However, what about the damage to your car? What does my collision coverage actually cover? What about a rental car? Who is going to be responsible for fixing my vehicle and putting me in a rental car while it is being fixed? The answer to that question depends all upon the course of action you choose.

Collision coverage, on your own automobile insurance, is the easiest and quickest route to take. Ultimately, your insurance company is going to be responsible for paying for the damage to your vehicle, regardless of who caused the car wreck, less your collision deductible. The downside is that it may be months before you get your deducible back, if at all, and your collision coverage will not provide for a rental car.

Another route is to make a claim against the insurance company for the at-fault driver assuming he was insured and fault for the car wreck clearly rests with him. In such a case, there is no deductible and the insurance carrier will put you in a rental car while your car is being repaired. However, listed above, were two conditions that had to be met before the insurance company is going to agree to pay the first penny:

Their driver has to be at fault for the wreck and
They have to agree that they have insurance coverage for this wreck.

You have to show that the at-fault driver was negligent and that this negligence caused the damage to your vehicle. If you can’t prove negligence by the other driver, the insurance company will simply deny your claim thereby forcing you to either file a lawsuit or use your collision coverage. Remember it is not what you think happened in the car wreck but rather what can you PROVE. (See May 16, 2016 blog, https://attorneydesmond.com/law-depends-upon-can-prove/ .)

So what about the police report? Isn’t that enough to show the other guy was at fault? Sometimes but, recall that negligence means you can show that the other driver had a duty, breached that duty and but for that breach, you would not have suffered your damages.

Nothing in the law prevents an insurance company from making reasonable assumptions, contrary to the assumptions contained in a police report, as to who was at fault for a car wreck; as long as these assumptions are based upon reasonable interpretations of the facts.

When a car wreck involves a drunk driver or a rear-end collision while you are stopped at a traffic light, it is pretty easy to show the other guy was negligent. However, when you have two drivers who both claimed to have entered the intersection on a green light, how do we know who is telling the truth and can’t an insurance company reasonably assume that their insured is being honest?

The second issue is that the insurance company has to have had valid insurance on that vehicle or the driver at the time of the car wreck. Insurance companies can deny insurance coverage for a variety of reasons including but not limited to: their insured is not cooperating with their investigation; the policy premiums have not been paid; they did not insure that driver; or that did not insure the vehicle involved in the car wreck. If this happens, you either have to use your collision coverage or try to find other insurance on this driver to cover the damage to your car.

If you don’t have collision coverage and you can’t find any insurance on the other driver, you may be looking at a lawsuit to try and recover for the damages to your vehicle. The problem being that lawsuits are lengthy, expensive processes that can end with you trying to collect on Judgment wherein the at-fault driver has little to no money to pay that Judgment.

In writing this blog, I realized I may need to address it a little deeper with a future blog or two. So for the moment, I would suggest you call me should you have questions about your damaged automobile. The call is free no matter whether we pursue a personal injury claim or not. You can reach me on my phone at [number]. FYI, since it is my phone, you can text me at that number as well should you prefer that method of contact.

ERISA and Health Insurance Subrogation Claims

Louisville Injury Attorney ERISA Subrogation

To explain ERISA (The Employee Retirement Income Security Act of 1974) and how it affects your medical bills and financial recovery in a simple fashion can be challenging, but its important to understand. ERISA is the law that governs the rights of health insurance carriers. If your medical bills from injuries in a car accident were paid by health insurance of an employer’s health plan, the insurance company or plan may want you to reimburse it out of any personal injury recovery.
The gist of all ERISA law is that if we, the health plan, pay medical expenses which were caused by someone’s else’s negligence and you recover a personal injury claim from any source, we have a right to recover from you. Legally speaking, the right of the insurance company to recover medical expenses they’ve paid from your personal injury claim settlement or verdict is called “reimbursement” or “subrogation.”
ERISA law generally tries to claim that it is controlled by Federal Law and preempts state law to the contrary. Your injury attorney must understand the implications of ERISA on your case.
Almost every health insurance plan, whether it be private, Medicare, Medicaid or state-funded, has a provision in it that says they have a right to recover the medical bills they pay on your behalf if you recover on your personal injury claim. This right is not limited to recoveries from third-parties but rather, includes recoveries made through uninsured motorist coverage, underinsured motorist coverage and no-fault benefits. Also, most health plans have contract language saying that they don’t owe attorney fees on the amount they recover and that they are a first-priority lien that trumps your rights no matter how badly you are hurt.
The law regarding health plans is ever-changing. Therefore, I have to limit my discussion to say you need to understand that your health plan has a right to recover what they paid out in medical expenses as a result of your motorcycle crash, car or truck accident. I know it is not fair and yes, I agree that they should not be allowed to recover anything since that is what we pay the health insurance premiums to cover. However, it is the law.
For my practice, I have to identify early on the interests of the health plan and look at their terms of the health insurance plan to determine the extent of their legal rights. Unfortunately, the health plan can legally come in and eat up much of a client’s recovery. This is why I have to try and negotiate a reasonable settlement with them as every dollar that does not go into their pocket, goes into my client’s pocket. This is also the reason why it is so important to have an experienced personal injury attorney like me working on your injury case.
The bottom line is for those of you who are trying to handle a personal injury claim, make sure you address the interests of the health plan. The last thing you want to happen is to settle your claim and get sued by your health plan several years after the settlement. I invite you to contact me or call me on my phone at [number].

How Do I Protect Myself in These Circumstances?

Louisville Injury attorney Indiana car accident lawyer

Car accidents in Kentucky and Indiana are rarely “straight forward.” Each case is unique and the circumstances, witnesses, and even applicable laws are different based upon where and how the crash happened. Insurance companies will always try to minimize the amount the pay, and that is usually at the expense of someone who is hurt. This is why you need an experienced injury attorney when you are injured in an accident. I want these blogs to help answer the question of “What should I know and how do I protect myself in these circumstances?”

I have been dealing with a new a car wreck case that I think really illustrates some of the problems people can encounter when fault for a car wreck is not clear or is disputed. When I met with the client she described that the car wreck occurred late at night, at an intersection and without witnesses. Based upon what she told me and what we saw on the police report, I knew that we would be dealing with a he said / she said situation wherein both drivers claimed they entered the intersection on a green light. Obviously, unless I can show complete or partial negligence on the part of the other driver, I can’t recover my client’s property damage or personal injury claim.

To my client’s credit, she thought “What can I do and how do i protect myself here?” and took pictures at the accident scene. More importantly, she mentioned to me that she saw several security cameras at a nearby business that may have captured the automobile accident on video. Luckily, she was correct. I sent an investigator to this business and she was able to obtain a copy of a video that showed the other driver ran the red light. The problem is that the insurance company still did not want to accept complete fault for the car wreck. They stated:

“We do believe our insured driver contributed the majority of negligence in the accident. Within a second after impact, our insured’s light turned green which leads us to believe that your client would have had a yellow light. Your client would have contributed some negligence for lookout as she should have used caution when going thru the intersection and should have realized our insured as coming thru the intersection.”

In other words, they are trying to argue comparative fault on my client. Kentucky is what is known as a pure comparative fault state and Indiana is a modified comparative fault. What this means in Kentucky is that if you are found to be 99% at fault for a car wreck by a jury, you can still recover 1% of your damages. In Indiana, you have to be less at fault than the other driver. So if a jury finds that your negligence was responsible for 50% or more of the car wreck, your claim is barred completely and you can recover zero of your damages.

In this case, I have argued to the insurance company that their position is based upon conjecture as they really do not have any testimony supporting their argument. While my argument appears to have gotten me past several hurdles for now, their argument is not completely dead and it sets up several problems for the future.

The question “what do I need to know and how do I protect myself from this circumstance?” goes farther than what happens before the accident. Let’s just say, for example, that my client agrees to accept just 10% of the fault for this car wreck to keep the injury claim in the pre-litigation phase and avoid the possibility of a lawsuit for now. First, the other driver, and his insurance company, would have the right to recover 10% of his damages, and any amounts paid by his insurance company, from my client or her insurance coverage. This might result in an increase in her insurance premium. Moreover, we have to make sure that she has enough insurance to cover all these damages. In Kentucky and Indiana, an insurance policy can have as little as $10,000 in coverage to cover the physical damage caused by a car wreck. If the other guy was driving a new Lexus that was a total loss, the value of the 10% property damage claim alone might still exceed the $10,000 in insurance coverage. Second, this comparative fault argument creates a conflict of interest.

As a personal injury lawyer, I am governed by rules of ethics established by the Bar Association for each state I am licensed to practice in. The gist of several of these rules is that I always have to act in my client’s best interest. If my driver has a passenger in her car and I am acting as the attorney for both individuals, how can I act in everyone’s best interest? To recover 100% of the passenger’s damages, I have to make a claim against both drivers. If I make a claim against my own client, I am obviously not acting in her best interest. This is why I would either have to get the conflict of interest waived by both clients or refer the passenger to another attorney.

So with these blogs, I always like to answer the question of “What do I kneed to know and how do I protect myself from this circumstance?” The honest answer on this scenario is that it is hard to do. However, if I am in a car wreck, I would do my best to take pictures of the accident scene immediately after the wreck and I would obtain/retain the contact information for any witnesses, independent of what was contained on the police report. I would also always see a doctor within 24 hours of the accident, even if you think you weren’t injured at all.

Also, while I hate to say it again, you should always consider “What can happen and how do I protect myself ahead of time?” by what insurance coverage you put on your own automobile insurance policy ; insurance coverage such as collision and rental car coverage. Yes, this results in a higher insurance premium. However, it allows you to submit the claims for your car damage to your insurance company rather than be forced to accept a split of liability, that you are not comfortable with, in order to get your car back on the road quickly. Ultimately, through a lawsuit or arbitration, your insurance company, through what is known as a subrogation claim, will try to get whatever they paid out on your behalf from the other driver’s insurance company.

I preach a lot in these blogs that there is nothing in Kentucky or Indiana law that guarantees you that 100% percent of the time the at-fault driver will have insurance, or enough insurance, to cover all your claims stemming from the car wreck. Well, this is kind of a similar corollary. As long as an insurance company has a reasonable basis in law or fact for their position, there really is nothing preventing them from telling you to prove a case in a court of law and convince a jury that your position is the right position. As a result, you, as an active motorist, has to take steps to make sure you are protected, before the car wreck occurs. “What do I kneed to know and how do I protect myself as much as is reasonably possible?” Usually, that means making sure your own automobile insurance has the right kind of coverage or that you can afford the loss (e.g. paying for your own rental car) should you encounter a situation with disputed fault.

Category: Insurance Issues