I've learned over the years that the quickest way to make people's eyes glaze over is to either discuss evidentiary rules in Texas courts or to talk about insurance. Despite being a topic that doesn't make people scream, "Oh, tell me more," following a fatal accident, knowing how insurance works is crucial to the surviving family members.
After a fatal car accident, especially one involving a young person, most people assume that there's going to a be a lawsuit that will result in a very large sum of money being paid to the victim's family. The unfortunate reality is that minimum coverage requirements in Texas are $30,000 per person and $60,000 per incident, and most people only carry a basic liability policy. So, for example, 2 people are killed in a car accident, the most either person's surviving family could get is $30,000, which would reach the $60,000 per incident cap.
Since most people don't keep a lot of cash in the bank, and Texas law protects people's homes, cars, and other valuable property from being used to pay lawsuit judgments, insurance monies are often the only funds available to compensate victims after an accident. This means that in situations where someone has the state-mandated insurance minimum, usually the most the victim's family can hope to recover is $30,000.
While it's impossible to properly value a human life in money, I can't think of a single person who would find $30,000 remotely adequate compensation for losing a loved one. To make matters worse, even when a person carries more than the minimum amount of insurance, an insurance company has an ace up their sleeve that can allow them to get away with only paying $30,000 in the event that their driver kills someone. Here's how they do it.
If you would like to know more about how to protect yourself from uninsured and underinsured drivers, check out our review of the pros and cons of adding UIM coverage to your auto policy.
Insurance Companies Don't Have to Tell Victims the Value of An Insurance Policy
Now there are many people out there who carry policies worth more than the state minimum, but the issue with these policies is that insurance companies have no legal obligation to disclose the value of a policy. A lot of people are surprised to learn this, but it makes sense if you back up a moment and think about what an insurance policy is.
At its most basic level an insurance policy is a contract between you and the insurance company. You're essentially telling an insurance company, "I'm a good driver, but driving has inherent risks and people make mistakes, which can cost a lot of money. I don't have a lot of money, so I'll pay you a little money every month and in exchange you'll pay out X amount of dollars if I ever really screw up and hurt someone."
Did you notice who is absent from that agreement? The potential injured people. They're mentioned, but they're not the one's making an agreement. At the end of the day, an insurance policy is just a contract between an insurer and a driver. Like any other agreement, for the most part, it is not subject to private scrutiny. Knowing that they don't have to divulge policy limits to accident victims allows insurance company to play a negotiating game.
As a result, there are some instances where victims will be offered $30,000, and they'll assume that's the policy limit. The issue here is that an insurance company offering this knows two things: that the damages are worth far more than $30,000 and that their policy limit is a lot higher than that. In reality, insurance companies rarely make an initial offer of the policy limit, because the value of the policy represents their worst day in court.
However, suppose the policy limit is actually, for example, $100,000 per person, then they know that the most they'll lose in court, under most circumstances, is $100,000. So why not offer $30,000, especially if they can trick people into thinking that's all they'll get?
After an accident, insurance companies almost always set a target amount that they're looking to settle the claim for. If a young person is killed in a fatal car accident and the at-fault driver has a $100,000 policy, the insurance company knows that there is a good chance they're going to have to pay out on the whole amount if the case goes to court. This means that their $30,000 offer, based on the fact that they don't have to tell the victim's family what the policy limit actually is, has the potential to save the company $70,000. Savings like these are how insurance adjusters distinguish themselves professionally and move up the ladder.
Insurance companies assign better adjusters to more valuable claims. This means that the person who is handling a $100,000, or more, accident, is likely to be very experienced and have a proven track record of saving the insurance company money on injury claims.
Of course, this whole strategy only works if the family of a fatal car accident victim doesn't know much about insurance law and the negotiating tactics of insurance companies. If they do, they can short-circuit most of these games.
Compelling the Insurance Company to Reveal the Policy Limits
As I mentioned before, no amount of money can make up for the loss of a spouse, parent, or child. Victims in fatal car accidents can never truly be made whole, which means those who pursue justice in these cases do so with the knowledge that they'll never get everything they deserve. However, one thing they can do is to put as high a price on reckless behavior as the law and circumstances permit.
The only way to know how high to set the bar when negotiating a resolution following a fatal car accident is to have a clear idea how much is available in compensation. This can only happen if you know the value of the defendant's insurance policy, which is why an experienced car accident attorney knows not to assume the value of an at-fault driver's coverage. In order to determine exactly what the policy limits are, there needs to be litigation. Contrary to what most people believe, litigation isn't just the process of filing a lawsuit and going to court. A large portion of litigating a car accident is done before suit is ever filed. While the only thing that can compel a car insurance company to divulge their client's policy limits is a subpoena, in almost every circumstance, car insurance companies will hand over this information to the victim's attorney, since and attorney will get the information one way or another.
There are times when the $30,000 passenger insurance minimum is all the money that is available to victims. However, when a truly horrific accident occurs, the least the victim's family should expect is that whoever is helping them with their case will leave no stone unturned when it comes determining how much compensation is available.
Dealing with the loss of a loved one in a car accident is hard enough on its own. The last thing those affected by such calamities need is an insurance company trying to swindle them over dollars and cents. The games that insurance companies play only work because they know more about insurance and car accident law than the average person seeking compensation. In short, they exploit a knowledge gap. How do families prevent being taken advantage of in these situations? By closing that knowledge gap.