Underinsured/uninsured motorist coverage is coverage which you have the option of buying in order to provide you additional coverage in the event you are injured by a motorist who has insufficient or no coverage. The Texas Financial Responsibility Law only requires that Texas drivers carry the minimum required insurance coverage which provides $30,000 per person and a total of $60,000 per accident in liability coverage. Because it is common for Texas hospitals to charge in excess of $30,000 for an emergency room visit even in cases involving relatively insignificant injuries it is not uncommon for a motorist in even a modest accident to need more than the minimum limits. Furthermore, Texas unfortunately has a large number of people who violate the Financial Responsibility Law and drive uninsured. In both of these situations the victims’ UM insurance kicks in and provides additional coverage. At the point that the victim makes a UM claim then the victims own insurance company in effect becomes the additional insurer of the at-fault driver thus providing additional insurance coverage available to the victim.
UM insurance has a number of characteristics which are different from first party liability insurance. UM insurance does not pay punitive damages. If you are injured by a drunk driver you would and should normally collect punitive damages from the drunk. However, it would serve no social policy purpose to collect punitive damages from your own insurance company and thus punitive damages are uncollectable under a UM policy.
When you make a UM claim you are, in effect, assigning a portion of your claim against the underinsured or uninsured driver. Thus, before you settle with and release the UM driver you must obtain the permission of your UM carrier because by releasing the at-fault driver you destroy the ability of your UM carrier to collect their UM payments from the at-fault driver. If the at-fault driver is solvent and you release them without the permission of your UM carrier then you may be waiving your right to make a UM claim.
UM insurance goes with you and provides you with additional insurance while you are in other vehicles. For instance, if you are a passenger in a friend’s vehicle and are hit by an underinsured or uninsured driver then your UM insurance will provide additional insurance after the at-fault driver’s coverage is exhausted.
Another significant difference is that hospital liens do not apply to UM insurance. For instance, if you are involved in an accident and deem it advisable to go get checked out at the emergency room it is not uncommon for hospitals to charge $20,000, $30,000, $40,000, or even $50,000 to check you out and release you. Under Chapter 55 of the Texas Property Code the hospitals have a right to file a lien on the liability insurance of the at-fault driver for the amount of their charges. Even though the hospitals’ services may only be worth 10 or 15 percent of the amount they charge they commonly use their lien to try and get all of the insurance proceeds and leave you with nothing to pay for your lost wages, other medical expenses, and other damages. However, the Chapter 55 hospital lien does not attach to UM benefits. While the reasonable amount of the hospital bill remains a valid debt there is no obligation to pay that debt directly from the UM benefits.
For more information contact www.earldrottlaw.com.