Advice From a Houston Accident Attorney
The Kishinevsky Law Firm is a personal injury law firm representing individuals who have been injured in car accidents and other accidents due to the fault of someone else in the greater Houston area. If you have questions relating to a personal injury claim contact us today for a free consultation with a Houston injury attorney.
What are Insurance Policy Limits and Why are They Important?
Insurance policy limits are the maximum amount that the insurance company is obligated to pay out for damages caused by a covered event, even if the actual amount of damages exceeds the limits. For example, the minimum policy limits for an auto liability policy in Texas are thirty thousand dollars ($30,000) per person/60 thousand dollars ($60,000) per accident for personal injury damages and twenty five thousand dollars ($25,000) for property damage. This is the full amount of auto insurance that a driver is required to have by law.
If an individual with minimum liability policy limits causes a wreck and the resulting damages exceed the policy limits, the owners of the damaged property would still only be entitled to collect the minimum policy limits from the insurance company of the person at fault.
If Someone Suffers Damage Above Policy Limits From an Auto Accident can They try to get the Rest From the Individual at Fault?
The short answer to this question is no.
Most drivers choose to buy auto insurance because they don’t have sufficient assets to meet the minimum financial responsibility requirements through other means. Texas law actually does not require drivers to buy insurance if they choose to instead get a surety bond meeting the appropriate legal requirements of Texas Transportation Code 601.121, deposit $55,000.00 with the Texas comptroller or a county judge (Texas Transportation Code 601.122, 601.123), or if they have 25 vehicles or more and qualify for self-insurance under Texas Transportation Code 601.124. The vast majority of Texas drivers choose to purchase insurance either because they do not have the assets to establish financial responsibility through these other methods, or because buying insurance makes more financial sense in light of their assets, debts, and financial obligations.
Any settlement reached with an insurance company by a person who was injured or whose property was damaged as a result of an auto accident is going to include a requirement that the injured person release the person at fault from further liability. This is the purpose of having liability insurance- it protects the insured’s assets by providing a first line of defense both in terms of personnel to evaluate and contest the claim (adjusters, investigators, lawyers) and in terms of funds that the insurance company will pay out in exchange for a full release of any further legal obligations against the at-fault individual.
The vast majority of individuals in Texas do not have personal wealth that would exceed the amount of funds available from their liability insurance in a situation where the damages they caused exceed the limits of their liability policy. This is especially true in light of the fact that Texas is one of the more debtor-friendly states in the country, meaning that the majority of the assets a typical individual owns could be exempt from being collected to enforce a judgment. Finally, judgments from a civil action are classified as unsecured debt (debt not secured by collateral as opposed to a mortgage, which is debt secured by real estate). The vast majority of judgments in civil proceedings, except for those dealing with fraud or other types of dishonest conduct, are fully dischargeable in bankruptcy. That means that even if a large judgment is obtained against an at-fault driver from an auto accident, the driver could typically get rid of the judgment by declaring bankruptcy. Because the judgment is unsecured debt, it would be last in line to receive money in the bankruptcy process along with other unsecured debt like credit card bills and behind all debts secured by collateral.
Unfortunately, in cases involving severe injuries, there simply may not be enough insurance to fully compensate the injured victim for their losses. The best way to guard against this situation is to be proactive and have a sufficient amount of insurance to fully compensate you for your own harms and losses if the other driver does not have enough insurance or does not have any insurance at all. For more information about the different types of insurance available and which ones are advisable to purchase, see our page on What Types of Insurance to Buy.
If you’ve been injured in a car accident or any other type of accident in the greater Houston area due to the fault of someone else, call us today for a free consultation with a Houston injury attorney. We are happy to answer your questions, discuss your legal rights, and see what we can do to help you recover what you are entitled to by Texas law.