Dealing with auto insuance after a wreck

The wreck was my fault:

Contact your insurance company and let them deal with the other driver. Do not negotiate or make any agreements on your own. There are two reasons for this advice. First, you have already paid your insurance company to take care of this for you. Let them do their job. Second, if you try and deal with things on your own, you may waive your insurance coverage. So don't do it.

Even if the wreck was your fault, you still may have coverage that will help you. If you have collision coverage, it will pay for the damage to your car regardless of fault. Also, if you were unfortunate enough to have been injured, your personal injury protection coverage will pay for your medical expenses and 80% of your lost wages even if the wreck was your fault. PIP is "no fault" coverage.

The wreck was the other driver's fault:

You are now concerned with at least two insurance companies - three if you were injured. The other driver's insurance company has an obligation to that driver to protect them from your claim. Believe it or not, their insurance company has no obligation to you, although they will likely want to settle with you to protect their driver. Otherwise you might sue their driver. Still, it is important to keep in mind where the obligation lies. Sometimes I hear complaints from clients that the other driver's insurance company will not return their calls or answer their questions. They don't have to. They may hope you simply get discouraged and go away. In two years, if you do nothing, your claim will be barred by limitations and the other driver and their insurance company, no longer have to worry about you.

Your insurance company, on the other hand, has an obligation to deal promptly and fairly with you. By the same token you have an obligation to cooperate with them. You have no such duty to the other driver's insurance company. You do not have to return their phone calls, give them information or provide them with a statement.

How do I get my car fixed?

If the wreck was the other driver's fault and you have collision coverage on your policy, you have two choices. You can ask the other driver's insurance company to fix or replace your car or you can file through your own insurance company on the collision coverage. It's not a bad idea to ask both companies to evaluate the damage. There may be a significant difference in their estimates. Naturally, if you go with your own company there will be a deductible, but if the wreck was not your fault, your company will get its money back from the other driver's company and will get your deductible back for you as well.

What if you still owe money on the car? The insurance company will pay both you and the loan company. What if you owe more than the car is worth? Hopefully, you have gap insurance on your note that will make up the difference. If not, sometimes you can go back to the dealer and make a trade for another vehicle on the same note. This is called a transfer of collateral, and usually works only with dealer financing. If you owe less than the car is worth, the insurance company will pay off the note, and pay you the difference.

Usually, you do not have to sign a release to get the property damage paid. If the vehicle is repairable, there will often be supplemental repairs and payments once additional damage is uncovered. Pay close attention to your car when you get it back from the body shop. It is a lot easier to get supplemental repairs and payment now than it is later.

If the other driver was at fault and their insurance company is paying, you are entitled to diminished value for your repaired vehicle. Simply put, a car that's been in a wreck is worth less than a car that has not been in a wreck. If you file under your collision coverage, you cannot get this payment.

You are also entitled to loss of use while your car is being repaired.

Compensation for my injuries

If you are injured in the wreck, you are entitled to compensation for those injuries. Texas law recognizes damages for medical expenses, loss of wage earning capacity, physical pain, mental anguish, disability and disfigurement. The amount of these damages are often disputed by the insurance company, and ultimately they are worth what a jury says they are worth. The insurance industry is massive and deals with thousands of these claims every day. To them it is business. To you, it is personal. Let's look a little closer.

Medical expenses: Texas, unlike most other states, has what is commonly called a "paid or incurred" statute. It says that the amount you can recover is limited to the amount paid plus the amount that is still owed. Most health insurance companies discount the amount of the bills, so that is the amount that can be recovered, plus deductibles and co-pays. To make matters worse, your health insurance company will want to get their money paid back. This is called subrogation. The amount and the circumstances in which they can recover depends on both the health insurance plan and the policy that pays your damages. Future health care expenses can also be recovered if they can be proved.

Loss of wage earning capacity: This is technically different from lost wages, but in most cases it amounts to the same. Texas law also says only the net, after tax, amount can be recovered.  Future lost wages can be recovered if they can be proved.

Physical pain: What is worth to hurt? What is worth to hurt a lot for a long time? Most people would not accept any amount of money for this, but insurance companies, attorneys and juries are asked to evaluate this harm every day. There are no formulas or metrics. In trial, we often look to the medical records for the severity and duration of the pain.

Mental anguish: The same can be said for this element of damages. Some people are effected a lot by the wreck, some not so much. We represent clients who have suffered PTSD from car wrecks. It is hard to predict. Again, there are no formulas or metrics.

Disability: Disability is the inability to do the things you enjoy, but that do not earn you money. Some people play sports, some exercise, some simply enjoy playing with their children and grandchildren. If your injuries prevent you from doing these, that is a disability.

Disfigurement: Fortunately, not everyone who is hurt is disfigured, but some are. Some horribly so. The law recognizes that this can be a significant loss to those people.

Who owes what?

If the other side is at fault and has liability insurance, their carrier will likely accept responsibility for the damages, both property and injuries. The fight will be over the amount. If the other driver does not have insurance or does not have enough insurance, then hopefully you have uninsured/underinsured motorist coverage. This coverage will then pay the damages as if they were the other driver's policy. They will then likely pursue the uninsured driver to get reimbursed.

Even if the other side has insurance, you may still be able to collect under your own policy for personal injury protection. This coverage pays reasonable and necessary medical expenses and lost wages (80%) up to the policy limit. It pays regardless of whoever else pays, and it cannot subrogate (get the money back). The at-fault driver's policy does not get credit for this payment. The only exception to this rule is if the at-fault driver was driving the car you were in and his liability policy is paying the claim. Then they can take credit for PIP payments under the same policy, unless your damages exceed both policies.

Stacking policies

In some instances you can stack policies to the extent of your damages. Let's say you are a passenger in a friend's car when the wreck happens. You are covered by your friend's policy for uninsured motorist coverage and PIP. You are also covered under your own policy for UM and PIP. If your damages equal or exceed both, you can collect both. If your friend was at fault, you can collect under their liability policy and your own UM and PIP, if your damages are that high.