Liability Insurance

Liability Insurance vs. Collision/Comprehensive/UM OR Theirs vs. Yours

Understanding the different insurance policies which pay for property damage is important. The first is the other person’s insurance which is called a liability policy. In Texas, we are all required to have a liability policy (with a minimum $25,000.00 of property damage coverage). This means we all are required to have a policy on our car which covers other people who we hit. If you are hit by a person, and they are at fault, their liability policy pays for your losses, including any of your property damages caused by the at fault driver’s carelessness.

The next coverage is called collision. Collision is not required under Texas law, but insurance companies are allowed to sell it as an optional coverage you can buy if you wish. Collision covers your car in the event it is involved in a wreck. Collision usually comes with a deductible of $500.00 or $1,000.00. This is your insurance, which is called first party coverage.

You may have a coverage called comprehensive or “other than collision”. This coverage covers your car for property damages caused by something other than a wreck, like hail. This is not applicable to our scenario.

Underinsured Motorist Coverage is another type of insurance for sale in Texas which is not required by law. This policy will cover your property damage if you are hit by someone who does not have any insurance, or their liability policy limits are less than the cost of your property damage (the other person does not have enough insurance to cover all of your loss). This coverage is known as UM or UIM and is a first party coverage, because it is a policy you buy which covers you. UM comes with a $250.00 deductible.

Ideally you will use the other person’s liability insurance coverage to fix or total your car. Often, however, there are issues which can be an extreme source of aggravation and using your own insurance is the better option. We discuss the most common sources of aggravation below.

Why is the Adjuster So Slow?

People involved in wrecks often find the other driver’s liability insurance adjuster is slow to accept responsibility and pay for property damage. Unfortunately, there is not a law in Texas which requires the liability adjuster to make payment within any certain time frame. Liability insurance is not your insurance, you did not pay for it, and, under Texas law, the carrier doesn’t have much of a duty to be fair or to pay promptly. The adjuster wants to make sure they must pay the claim before they start paying. They perform an investigation which generally means calling and talking to their driver, getting a police report, or talking to other witnesses, including you. This investigation can take some time, and can make you mad as a hornet if you are without a car.

Unfortunately, your only remedy to this problem is to file a lawsuit. Lawsuits are expensive and not very fast, so this isn’t a quick solution. If you have an injury claim that justifies the lawsuit then you may be able to file it right away, and this might spur the liability carrier into resolving your claim. If you are not hurt, then all you can do is to keep calling the adjuster to move more quickly on your claim. Finally, you can use your own insurance, which is discussed elsewhere. People don’t like to use their own insurance, but often it’s the best course of action.

Why is the insurance adjuster not paying for 100% of my damage?

What if the other driver wasn’t the only cause of the wreck? Contributory negligence is a law in Texas which says that if you are partly at fault in the wreck, then the other driver’s insurance doesn’t have to pay for the part of the damages you caused.

An example might be if you and the other driver approach an intersection with stop signs in all directions and neither driver stops causing a collision in the middle of the intersection. If you were found to be 50% at fault, and you had $10,000.00 worth of damages, then the other driver’s insurance would only pay you 50% of your damages, or $5,000.00. If you were found to be 10% at fault and the other driver was 90% at fault, then the other driver’s insurance has to pay you $9,000.00.

As you can see, contributory negligence reduces the amount of money the other driver’s insurance has to pay to you. Adjusters are highly motivated to find contributory negligence because it gives them a reason to refuse to pay for all of your damages. If the other driver tells their insurance company you caused the wreck, even just a little, then the adjuster will say that you are a percentage at fault and reduce their offer accordingly. Even in the face of overwhelming evidence, the adjuster will choose to believe their driver to reduce the amount of money they pay to you. This can be maddening if you did not do anything wrong.

We have had adjusters place partial blame on our client when the other driver ran stop signs and red lights. Contributory negligence gives the adjuster a strong financial motive to blame you, even a little, for the auto accident. This means you need carefully consider the way you describe the wreck when speaking with the adjuster. If you say something that is ambiguous and could be interpreted to your disadvantage, the adjuster will assume the interpretation that is most helpful to their side.

In addition, there may be disagreements about what a car is worth. Please see the total loss discussion if you and the adjuster disagree about the value of your car.

Should I Give a Recorded Statement

Generally, you should avoid giving recorded statements regarding your auto accident, but sometimes you must give one to get the property damage resolved. Recorded statements can be used against you later, but they can never be used to support you. There is a rule in the Texas Rules of Evidence that pretty much says that statements can only be used against a person. This Rule is why car accident lawyers almost always tell their clients to not give a recorded statement about their car accident. There are times, however, when a liability carrier will refuse to repair your vehicle unless you give a recorded statement. If you do not have a collision policy, then you may have to give a recorded statement in order to get your vehicle repaired or totaled.

The best thing you can do at this point is call an auto accident lawyer. Misstatements in a recorded statement may be impossible to overcome.

If you must give a recorded statement, then remember that liability coverage covers the other driver for their actions and do not say things indicating the at fault driver was not at fault. You may have an aversion to telling someone they did something wrong. This is common. People generally do not like confrontation and generally don’t want to blame others. This tendency may lead you to blame other things for the auto accident besides the other driver’s actions.

Don’t blame the rain, the snow, the sun, a sign, tree, other obstructions to vision, or yourself if the other person caused the wreck. Remember that liability coverage covers the other driver for their careless driving. If the other driver is at fault, then say it in plain language. If something other than the other driver caused the auto accident, you should not be making a claim against the other driver. Do not say things tending to indicate you should have done something different unless you were partly at fault in causing the wreck. Freak accidents, acts of God, a high shrubs, weather, and your actions are not insured by the other driver’s insurance. They will not pay for those things. To the contrary, they will blame those things to avoid paying you. See the above discussion about contributory negligence and remember that the insurance adjuster essentially gets a discount if they can say that you, or something else, caused the wreck.

Texas Limits of Liability – How Much Insurance Does the Other Person Have?

The minimum amount of liability insurance for property damage on a liability policy is $25,000.00. This limit is the most the insurance company will pay to repair or total your vehicle. The other driver may have a liability insurance policy with a higher limit of property damage coverage, but $25,000.00 is the lowest amount the other driver can carry under Texas law.

Many people in the Sherman and Denison areas drive cars with this minimum limit. If the other driver does not have enough insurance to cover the property damages, then you must look to your own insurance to cover the balance of the loss. This could be either an underinsurance coverage, or collision coverage. Neither underinsured motorist nor collision is required under Texas law, so you may not have these coverages. If you did not purchase UM or collision and the other person does not have enough insurance coverage to pay for the property damage, then the loss is not going to be completely covered. This is a problem.

Things that Texas Liability Property Damage Must Pay For

If the other driver is at fault, then his liability insurance pays for all of your property damage up to their limit of insurance. The insurance company must cover any damage to your car, children’s car seats, other property in your car such as eye glasses, or any other property which is destroyed or damaged in the accident. If your car is repairable, then it must be repaired with like parts. (See Repair for more information). If your vehicle is a total loss, then the insurance company must pay you fair market value of the car before impact (See Total Loss for more information). Finally, the liability carrier must pay for a replacement vehicle during the time of repair or replacement. (See Rental for more information).

Things that Texas Liability Property Coverage Does Not Pay For

Mental anguish and emotional loss associated with the loss of property is not recoverable under Texas law. This includes the mental anguish associated with the loss of a pet, which is considered property. If your car is a total loss, the liability insurance also does not pay for any “gap” between the fair market value of the car and the amount of any loan you might have on the car. If the fair market value of the car is worth less than the loan amount (sometimes called being upside down) then you may be left with no car and a note that you still owe. See the discussion about Gap Insurance.