Automobile Insurance Issues In Texas
By HAWLEY HOLMAN
Automobile insurance is generally provided by a policy of insurance promulgated by the Texas Department of Insurance (TDI). Insurers are now permitted to apply to the TDI for
permission to vary the standard form. TX. Ins. Code Art. 5.142. Thus, it is very important to obtain a copy of the policy to review the exact language. Generally, the automobile
policy will have several parts such as: Collision, Liability, Uninsured/Underinsured Motorist Coverage, Personal Injury Protection Coverage (PIP) Medical Payments Coverage (Med
Pay) as well as many possible endorsements. It is important to consult the Declarations page of the policy to determine the different types of coverage. Texas law requires that
each person who drives a vehicle on the roads demonstrate financial responsibility, which means that the driver must have at least $30,000 in bodily injury liability coverage
per person; $50,000 bodily injury coverage per accident; and $30,000 property damage per accident. Whenever a driver from another state operates a vehicle and that state requires
less in coverage than Texas, their policy generally requires that the policy comply with the minimum financial responsibility laws of the state where the accident occurred.
Agreement – This section of the policy provides definitions used throughout the policy. Courts have
determined the meaning of these definitions and, in some cases, there can be differing court opinions.
PART A-Liability Coverage Insuring Agreement – This section generally says that the policy will pay for
damages for which a covered person becomes legally responsible because of an auto accident. This section defines who a covered person is, describes Supplemental Payments and also
lists Exclusions which identify events or acts which are not covered.
Part B1 – This section discusses Medical Payments Coverage which basically says that the policy will pay
reasonable expenses incurred for necessary medical and funeral services because of bodily injury and also provides for exclusions from medical payments coverage.
Part B2 – This section discusses Personal Injury Protection Coverage which basically says that the policy
will provide for medical expenses to be paid directly to a physician or other health care provider upon receipt of a written assignment signed by the covered person to whom the
benefits are owed. This section also includes exclusions from PIP coverage. PIP coverage is no-fault coverage to provide for the immediate expenses arising from physical injuries
due to an automobile accident.
PART C – This section describes the Uninsured/Underinsured Motorist Coverage. UM/UIM coverage must be
included in every policy unless it is rejected in writing by the insured. If you initially rejected UM/UIM coverage and your policy is being renewed and you wish to add UM/UIM,
notify yo0ur agent in writing to add There is uncertainty over whether an initial rejection is valid against a renewal policy so the better practice for an insured is to make sure
that you have UM/UIM coverage UM/UIM coverage and get the addition of coverage in writing. UM/UIM coverage is coverage that you are providing for you and your family members or other
covered persons against the negligence of another operator who has no insurance or inadequate insurance to cover damages caused by the negligent operator. UM coverage also protects
for damages caused by the negligence of an uninsured driver or a hit and run driver. UIM coverage provides protection for an insured caused by the negligence of a third party whose
liability coverage is insufficient to make the insured whole or cover all of the injuries and damages. This is insurance which the insured takes out to protect himself and his family
or other covered persons from a UM/UIM driver. The case law appears to indicate that punitive damages are not covered under UM/UIM coverage. One caveat for UIM coverage is that an
insured must get consent from the UIM/UIM carrier for the insured to settle with the liability carrier for the underinsured motorist. There are many different definitions and
requirements in the UM/UIM section of the policy as well as exclusions which means that anyone having a potential claim under these provisions needs an attorney who is very familiar
with and has handled many claims of this type. I have seen situations where attorneys unfamiliar with automobile policy requirements settled with the liability carrier for the negligent
party without obtaining permission from the UM/ UIM carrier only to have UM/UIM coverage rejected for failure to obtain permission required by the policy.
Part D – This section provides coverage for damage to your auto. This section is coverage you provide to yourself
for direct and accidental loss to your auto.
Endorsements – These are additional coverage provisions which may be added to a policy. You must look at your
policy to determine the applicable endorsements and their contents.
The Prompt Payment of Claims Act – (Art. 21.21, Texas Ins. Code). This act provides a set of timelines which are
now part of standard form policies written in Texas. If an insured does not comply with Article 21.55 it could be responsible for 18% interest and reasonable attorney’s fees.
PIP OFFSET – Since PIP and UM/UIM both allow for payments for medical expenses, questions have arisen though the
years over the offset issue. In 1999 the Texas Supreme court allowed an offset of PIP payments against UM/UIM coverage to the extent it prevents double recovery. In other words, it the
persons’ claim is less than the UM/UIM limits the carrier can take an offset but if the damages exceed the UM/UIM coverage the carrier can’t offset where it would reduce the UM//UIM
coverage below minimum limits. It does not limit stacking of PIP and UM to cover actual damages.
Automobile litigation is very complicated and involves many different issues which must be addressed with respect to accidents
especially if several people are injured in one accident. In this situation, an attorney will need to investigate every possible policy of insurance or source of coverage for the injured
person or persons. For example, a child injured in a motor vehicle accident and who has divorced parents could possibly be covered under both parent’s policies of insurance assuming they
both have UM/UIM coverage. In Hartford Cas. Co. vs Philips, the court held that a child of divorced parents can be a member of both parents’ households and be potentially covered under
both policies. There are many aspects of auto coverage issues and litigation. Automobile carriers hire very experience litigators who are familiar with the complicated issues in automobile
litigation. Why shouldn’t you retain someone who also has the same experience to represent you or your family member in an accident involving injuries?
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