Finding Layers of Insurance Coverage

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.