The key to recovery in either situation will be the amount of insurance you’ve purchased. Look on the declaration page of your auto policy (that’s the page that lists the types of coverage you purchased and the amounts). Go to the section of the policy that discusses coverages. If you have purchased underinsured driver and uninsured driver coverage, it will be listed on the declaration page (See Part C from the excerpt of a declaration page below). Also listed will be the dollar amount of the coverage available.
Insurance Coverage in Texas
If your declaration page does not show the amount of coverage, that may not be the end of the story. Texas law requires that your insurer offer you the coverage. You can reject the coverage, but your rejection must be in writing. If your declaration page does not show UM/UIM coverage, a lawyer can request proof of your signed rejection.
If you have this uninsured driver and underinsured driver coverage, you can recover against YOUR insurance company for the damages the uninsured driver caused. Essentially, your insurance company stands in the position of the uninsured driver. In presenting your claim to your insurance company for a driver that is uninsured, you have to demonstrate two things. First, you need to show that the uninsured driver was a fault for the collision. Second, you need to show the extent of your damages caused by the wreck with the driver, that was uninsured. Importantly, you do not have the burden of proof on whether the other driver has insurance; if your insurance company believes the other driver has insurance, it must prove it.
If your recovery is against your own insurance for the acts of an uninsured driver, you may ask why you need a lawyer in the first place? After all, isn’t my insurance company supposed to look out for my interests?
You’re right to think that your insurance company should be looking out for your interests first. In most areas of insurance law, your insurance company has its first loyalty and obligation to you; it’s insured. It has duties to make reasonable offers to settle your claim and to respond to you promptly.
Unfortunately, in the area of underinsured driver and uninsured driver claims, your insurance company’s obligations have become less clear as a result of the Texas Supreme Court opinion in Brainard v. Trinity Universal Insurance Company, 216 S.W.3d 809 (Tex. 2006).
Brainard involved an underinsured driver claim brought by the family of an insured driver who was killed in a head-on collision with a rig owned by a well service company. The family secured the underlying policy limits of the well service company in the amount of one million dollars, then sought recovery of their underinsured driver benefits of one million dollars from their insurer, Trinity Universal. Trinity denied the claim, and the case was tried by a jury. The Gray County jury awarded actual damage of $1,010,000.00 and attorney’s fees of $100,000.00. After an offset for PIP and the underlying liability limits, the trial court signed a judgment for $5,000.00 and $100,000.00 in attorney’s fees. The Court of appeals reversed the trial court judgment on attorney’s fees, with the Supreme Court granting the petition for review. Importantly, the insured’s extra-contractual claims against Trinity were severed from the breach of contract claims and remained pending at the time of the Court’s opinion. Brainard, 216 S.W.3d at 811.
In arguing for recovery of attorney’s fees under Chapter 38 of the Civil Practice and Remedies Code, the insured driver asserted that a UIM contract is no different in any material respect from any other insurance contract. Thus, the insurer’s failure to pay the policy benefits upon the submission of a claim constituted a breach of the insurance contract.
The Court rejected this argument. The Court relied on the relevant section of the UM/ UIM statute, which reads:
The underinsured driver coverage shall provide for payment to the insured of all sums which he shall be legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage in an amount up to the limit specified in the policy, reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle.
Tex. Ins. Code art. 5.06-1(5).
The Court reasoned that the statute obligates a carrier to pay damages that the insured driver is “legally entitled to recover” from the underinsured driver. Id. This requirement, according to the Court, means that the insurer has no contractual duty to pay benefits until the insured driver “obtains a judgment establishing the liability and underinsured status of the other driver…
[n]either requesting UIM benefits or filing suit against the insurer triggers a contractual duty to pay.” Brainard, 216 S.W.3d at 818.
This new requirement of a “judgment” came as a shock to most of us who thought we understood how this forty-year-old statute worked. Indeed, an early case interpreting this statute permitted you to assert a claim when you had no ability to take a judgment against the tortfeasor, in Franco v. Allstate Ins. Co., the Texas Supreme Court held that an insurance company is not entitled to assert the two-year statute of limitations defense that may have been available to uninsured drivers. 505 S.W.2d 789, 792 (Tex. 1974).
The Franco court stated that “the phrase ‘legally entitled to recover’ has been interpreted to mean simply that the insured driver must be able to show fault on the part of the uninsured driver and the extent of the resulting damages.” Id. at 792. In other words, it merely describes the elements the insured driver must prove to establish coverage. It is not a procedural bar to recovery. Id. (“procedural” bar of limitations not available to the insurance company).
In converting what had been an issue of the burden of proof when establishing coverage to a procedural impediment, the Court left us with more questions than answers in presenting underinsured driver and uninsured driver claims. This is an area of law where I have taken a particular personal interest in an effort to make sure the law works for injured Texans.