ClaimClinic: Car Insurance
Insurance permeates your personal injury claim in a lot of different ways. Understanding how different kinds of insurance affect your claim puts you on even footing with the adjuster. Part of your investigation should be spent locating, investigating, and analyzing insurance coverage. Coverage availability and amounts can affect some of the decisions you will have to make in your claim.
At-Fault’s Car Insurance
One of your first tasks in working up your claim should be to find out how much, if any, “liability” insurance the at-fault driver has. Liability Insurance usually covers: medical treatment/bills, property damage to your car, lost income, and pain and suffering. These are all the components that make up your personal injury claim.
If there is more than one at fault driver, then you need to get and know all liability policy limits. The more money you have available, the better off you are. You can’t recover more than your claim is worth, but there is peace of mind knowing there is enough insurance to cover the fair value of your claim. Also, insurance companies sometimes are a little more open to overpaying on a case when they are sharing the settlement with other insurance companies.
Because you will be relying on the liability limits the adversarial adjuster tells you is available, you need to obtain a “certified” statement of policy limits from the other driver’s insurance company. This usually takes the form of an affidavit or a sworn statement on the driver’s Declarations Page. A Declarations Page is a one page summary of your automobile insurance coverage. It will tell you the limits of liability insurance the other driver has available. You need to know this because at some point it may not make sense to wait until the end of getting better to make a demand. Your claim may be worth “policy limits” well before you are done treating and there is no reason to delay in getting your Demand out.
If the other driver was driving without insurance, you will need to immediately turn your attention to your insurance for compensation under your uninsured motorist coverage. See below. If the other driver has insurance, but not enough, you will need to settle out with the other driver’s insurer and then go to your insurance company for the rest in the form of underinsured motorist coverage, discussed.
Multiple At-Fault Drivers
Sometimes more than one person is at fault for your accident. If you fall into this situation, notify all the other insurance companies and let them fight over how they are going to pay. The insurance companies will either agree to each pay a portion of your settlement, or they will agree to “priority” – or whose money goes first. For example, say Insurance Co. A has $15,000 and Insurance Co. B has $25,000. Your claim is worth $20,000. If Insurance Co. A has priority, they will pay their entire $15,000 first and Insurance Co. B will pay the additional $5,000. If Insurance Co. B has priority, it will pay you $20,000 and Insurance Co. A will not be reached and not have to pay you anything. So you can see why the insurance companies fight over who has priority – it reduces or sometimes eliminates all together what they have to pay for a car accident claim.
Personal Injury Protection (PIP)
Some states are “no-fault” states. Your insurance policy calls this “Personal Injury Protection,” or PIP for short. No-Fault kind of works like workers’ compensation. Medical expenses and lost wages are paid for promptly and with no argument. In exchange for this efficiency, insurance companies are let off the hook for pain and suffering and other damages you would otherwise get in a personal injury claim. One of the gotcha’s is that PIP coverage is limited to a certain dollar amount. You will need to look at your insurance policy to determine what that limit is. You also need to keep an accounting of your medical expenses if you live in this kind of state so that you can monitor whether you are under PIP or go over it.
No Fault/Personal Injury Protection States:
- New Jersey
- New York
- North Dakota
Getting Out From Under PIP
PIP always has a cap or ceiling on the amount of money the insurance company will pay. The system is designed to cover small car accidents. What is a small car accident? States use the total amount of your medical bills to determine whether your claim is small enough to stay in the no-fault system. If your total medical expenses exceed your state’s limit, then you can get out of the no-fault system and get a “regular” personal injury claim that includes compensation for pain and suffering. The takeaway here is that if you can get your medical bills above your state’s threshold, you will be entitled to pain and suffering in addition to your medical expenses. For example, if you have one more physical therapy appointment scheduled and you don’t’ really feel like going, it may be that last therapy charge that puts you over the PIP limit of your state. If you break free of the no-fault system, you can make a claim against the other driver’s insurance company for the full value of your claim, including pain and suffering, emotional damages, and lost opportunities.
To determine whether your medical expenses exceed your State’s requirements, you first need to see how your State defines “medical expenses” and what your State’s dollar requirement is. You can either Google it or pull out a copy of your car insurance policy to see how it defines the term.
Read your car insurance policy to see how it defines “medical expenses” and the threshold dollar amount. This will be the rule for your State.
You need to be aware that insurance companies will sometimes deduct medical expenses from your claim, saying they are unnecessary, to keep your claim in the no-fault system. Insurance companies want to keep your claim in the no-fault system because then it does not have to pay pain and suffering on your claim, making them more money by paying you less on your claim. If you are the victim of this dirty trick, you need to document all your medical expenses as taught in Investigating and Documenting section of ClaimClinic. Then confront the adjuster, telling them you know what they are trying to do.
Uninsured and Underinsured Drivers
If the other driver does not have insurance, or if he/she does not have enough, you will need to turn to your uninsured/underinsured motorist coverage, called “UM.” You also get UM if your accident was a hit-and-run or if you were a pedestrian that was hit by a car. UM is insurance that you buy to protect yourself from other drivers who either don’t have insurance or who elected not to purchase as much insurance as your claim is worth. Uninsured or Underinsured Motorist Coverage, or UM for short, is optional insurance that is part of your auto insurance. This insurance will reimburse you or a family member if you or they are hit by either an uninsured driver, a hit-and-run driver, or in some cases when the other driver has inadequate insurance to pay for your total loss. UM insurance is essentially insurance against the other driver not having enough insurance. It is you protecting yourself.
If you are going to go into a UM situation, you must figure out whether your UM is add-on type coverage.
One way UM insurance works, and the way most people think it works when they purchase it, is that your UM coverage is “added on” to the other driver’s liability insurance. For example, if you have $100,000 in UM insurance and the other driver has $25,000 in bodily injury coverage, you are only entitled to all $100,000 of your UM insurance, giving you $125,000 of total available insurance. Unfortunately, this is not the only type of UM insurance.
The Reduction Rule
The alternative to add-on UM coverage is known as Reduction UM. Surprisingly, the rule sometimes prevents you from accessing the full amount of your UM insurance – the insurance you have been paying premiums on. The Reduction Rule says you only get the difference between the other driver’s liability coverage and your UM coverage. An example is in order.
If you have $100,000 in UM insurance and the other driver has $25,000 in bodily injury coverage, you are only entitled to $75,000 of your UM insurance, not the full amount. This is because your UM coverage is reduced by the amount of the other driver’s insurance.
Even more unfair is where you have $25,000 of UM insurance and the other driver has $100,000 bodily injury coverage. Here you do not get any of your UM insurance because it’s less than the other driver’s coverage.
Duty to Cooperate
The Duty to Cooperate clause is found in almost every auto policy. It says, as part of your insurance contract, that you must cooperate with your insurance company if you want them to cover your claim. Failure to cooperate can, in rare circumstances, result in the insurance company refusing you coverage for your claim.
Cooperation includes proving your UM adjuster with information about the accident and giving a recorded statement. Many UM adjusters will say it also gives them the authority to demand that you sign an authorization to get your medical records. If you are asked to sign a medical records authorization, tell the adjuster you will provide a complete set of your medical records as part of your Demand Package. Arguably, this is not prejudicing the insurance company because they are still going to get the information needed to adjust your claim, but from you. If the adjuster refuses to go along with this, you may have no choice but to sign the authorization or risk a denial of coverage for refusing to cooperate. It is our experience that adjusters won’t push the records authorization issue once they understand you know what you are doing.
Notifying Your Insurance Company
Unlike your claim against the at-fault driver where you have until the statute of limitations to file a lawsuit, most UM insurance policies require that your promptly notify them of your accident. You need to call your insurance company as soon as possible to open a claim, even if you never intend on going after your own coverage.
If your insurance company says you did not timely notify them of your claim:
- Demand they show you the language in your insurance policy that requires timely notice
- Demand they explain IN WRITING how their investigation into your claim has supposedly been prejudiced by your alleged late notice.
Many times the timely notice trick does not go anywhere and the adjuster is just trying to make you feel uncertain about your claim to give you less money. NEVER admit your notice was not timely and do not ever discount your demand or evaluation of your own claim because of this. Tell the adjuster you disagree with their position and won’t even consider it as a reason to reduce your demand unless a court of law says they are right. For an insurance company to deny coverage like this, they usually have to file a lawsuit (called a Declaratory Judgment action or DJ in insurance speak) asking a Judge to decide whether notice was timely.
When Coverage Is Denied
When an adjuster tells you they are denying your claim because their insurance policy does not cover the accident, they are taking the position that even if you are entitled to a settlement, they will not pay you and you will have to collect from the at-fault driver personally. While you can do this, it means having to get a judgment against the at-fault driver and then using the court system to collect on that judgment.
There are a few signs that you want to look out for to determine if the adjuster is playing fast and loose with denying coverage. Infrequently, an adjuster may try to act like there is no coverage to make you feel uncertain about getting paid, thereby motivating you to take a lesser amount because you think something is better than nothing. Signs your adjuster may not be on the up-and-up with coverage include:
- Not referring to the specific language in the insurance policy that says there is no coverage
- Failing or not willing to provide you with a complete copy of their insurance policy
- Denying the claim, but then asking for more information
- Denying the claim, but then sending you a Reservation of Rights letter.
You can try to call the adjuster on their bluff. Unfortunately, if the adjuster does not change their denial position, your only course of action is to retain a lawyer to fight for coverage. Lawyers do this by filing Declaratory Judgment actions. This is where a lawsuit asks a Judge to issue a ruling on whether an insurance policy provides coverage under a certain set of facts.