Subrogation is the legal term when one person or entity is entitled to "stand in the shoes" of another person. Generally, subrogation arises when an insurer makes a payment to a person and that person has a claim against a third party. If the person is successful in the claim against the third party, the insurer is entitled, under the ldoctrine of subrogation, to get its money back out of the third party's payment.
For example, Joe is in auto accident. Joe's health insurer makes payments on the bills Joe incurs for his medical treatment. Joe's health insurer has the right to subrogate against any claim that Joe has against Mary,the person who caused the accident. If Joe is successful in asserting a claim against Mary, Joe's insurer is entitled to be reimbursed what it paid on Joe's medical bills out of Mary's payment to Joe.
In addition, if for some reason Joe did not pursue a claim against Mary, Joe's health insurer could sue Mary in Joe's name, asserting its right of subrogation. This is generally a contractual right that Joe agreed to when he entered into the contract. Even if Joe did not want Mary to have to pay, Joe's insurer has the right to sue Mary, regardless of Joe's desires.
In theory, subrogation seems to be fair and equitable. But, in practice, many times it is not.
For example, many insurers refuse to pay their part in the pursuit of the claim against the third party. Many times these claims can be very difficult and expensive. If, in our example above, Joe had made a claim against Ford for a defective vehicle design that caused the accident, it might have cost Joe tens of thousands of dollars to successfully pursue the claim. Yet, under the doctrine of subrogation, as declared by the Texas Supreme Court, the health insurer would not have to pay its proportionate share of the cost to obtain the payment. In other words, the health insurer can freeload on Joe's effort and gain the benefit of his effort without taking any risk or even paying it share of the cost of the effort.
So, in practice, subrogation allows insurers to freeload on an injured person's efforts and obtain full reimbursement with no risk and no cost to the insurer.
Tuesday, January 27, 2009
Friday, January 23, 2009
Family Member Exclusion
There is a terribly mean spirited provision in all Texas auto policies. The provision excludes from coverage under an auto liability policy coverage for damages caused by a family member to a resident family member in a collision. This is called the "family member exclusion."
Example: Grandmother is driving grandchildren to day care. Grandmother negligently causes collision resulting in severe injuries to one of the grandchildren.
If the injured grandchild doesn't live in the same house as the grandmother, the grandchild can make a claim under the grandmother's liability policy for the injuries and damages suffered by the child.
BUT, if the grandchild lives with the grandmother, the family member exclusion excludes the grandchild from the right to make a claim under the policy.
The family member exclusion acts to provide immunity to the liability insurer in situations where family members who live with the driver are injured. This exclusion has terrible consequences on the youngest and most innocent passengers.
Insurance companies argue that the basis of the exclusion is to keep family members from colluding to defraud insurance carriers. For some reason, insurance companies feel that resident family members are more likely to defraud insurance companies than friends or even family members who don't live together. There are no studies or other objective indications that that family members who live together defraud insurance companies. And, in every claim, the insurance companies investigate to make sure there is no fraud in the claim.
There is no basis for this exclusion, EXCEPT to increase profits of insurance companies.
How many of you knew about this exclusion? How many of you thought that your family members who live with you would be treated the same as a stranger who you negligently injure? In fact, in my experience, insureds think that their family members will be treated BETTER, since they are paying the premiums.
This exclusion has been enforced by the Courts for years, with no basis to uphold the belief that family members are defrauding insurance companies.
In fact, in my example above -- a real case I have seen -- can anyone believe that a grandmother would collude with her 4 year old grandchild and then subject her 4 year old grandchild to serious injury or death to obtain insurance benefits???? It baffles the mind!!!
But, until we get the legislature to prohibit this exclusion, resident family members will be excluded from coverage under the policies and considered, by the insurers, as frauds.
Contact your legislator and tell them to act to prohibit the "family member exclusion."
Example: Grandmother is driving grandchildren to day care. Grandmother negligently causes collision resulting in severe injuries to one of the grandchildren.
If the injured grandchild doesn't live in the same house as the grandmother, the grandchild can make a claim under the grandmother's liability policy for the injuries and damages suffered by the child.
BUT, if the grandchild lives with the grandmother, the family member exclusion excludes the grandchild from the right to make a claim under the policy.
The family member exclusion acts to provide immunity to the liability insurer in situations where family members who live with the driver are injured. This exclusion has terrible consequences on the youngest and most innocent passengers.
Insurance companies argue that the basis of the exclusion is to keep family members from colluding to defraud insurance carriers. For some reason, insurance companies feel that resident family members are more likely to defraud insurance companies than friends or even family members who don't live together. There are no studies or other objective indications that that family members who live together defraud insurance companies. And, in every claim, the insurance companies investigate to make sure there is no fraud in the claim.
There is no basis for this exclusion, EXCEPT to increase profits of insurance companies.
How many of you knew about this exclusion? How many of you thought that your family members who live with you would be treated the same as a stranger who you negligently injure? In fact, in my experience, insureds think that their family members will be treated BETTER, since they are paying the premiums.
This exclusion has been enforced by the Courts for years, with no basis to uphold the belief that family members are defrauding insurance companies.
In fact, in my example above -- a real case I have seen -- can anyone believe that a grandmother would collude with her 4 year old grandchild and then subject her 4 year old grandchild to serious injury or death to obtain insurance benefits???? It baffles the mind!!!
But, until we get the legislature to prohibit this exclusion, resident family members will be excluded from coverage under the policies and considered, by the insurers, as frauds.
Contact your legislator and tell them to act to prohibit the "family member exclusion."
Thursday, January 22, 2009
What auto insurance should I purchase?
In my practice I get this question often -- but almost always after the need for insurance has already occurred. The "horses are already out of the barn" by then.
Here is what you should do to meet the law (specifically Texas law) and protect yourself and your loved ones:
1. Purchase at least the minimum required liability insurance and keep it paid up to date. You have to do this to legally drive down the road. Failure to carry at least the minimum coverage can be disastrous - legally, financially and emotionally, if you are in an accident that happens to be your fault. (And any of us can look away for a second and be in that accident.)
2. Once you have purchased the minimum liability coverage, you need to assess your needs. There are different coverages you can purchase and different needs you may have that someone else might not have.
3. You should select as much liability coverage as you can afford and evaluate how much you need to protect your assets. If you have a real estate or other property, cars, boats, money in the bank, retirement accounts, etc. That is potentially subject to being taken from you and applied to any judgment against you for an accident you caused. You should make sure that your assets are protected by purchasing high enough liability coverage to protect those assets. It is much cheaper to pay an insurance premium than it is to recreate all these other purchases, if they are taken from you to pay a judgment. (My father termed the failure to protect you assets in this manner "penny wise and pound foolish.")
4. The major coverages in addition to liability coverage are:
6. Uninsured/underinsured motorist coverage (UM) is a VERY important coverage to carry. Anyone driving on the roads today should have UM in the same amount as their liability coverage. UM covers you and your family and anyone in your vehicle in case an uninsured or underinsured person causes an accident in which you are injured. In other words, it acts as the other driver's liability insurer -- which provides coverage to you and your family if the person who causes the collision is not responsible and does not buy insurance. Unfortunately, those who lack the responsibility to carry liability coverage are more likely to lack responsibility when they drive down the road - thereby causing more accidents.
7. UM is the MOST important coverage to buy, once you have your liability coverage. And you should purchase it in the SAME amount as your liability coverage. Why would you buy $100,000 worth of insurance to protect your assets and buy only $25,000 to protect your self and your family -- they are worth much more than all your assets. And the BEAUTY of UM coverage is that it is CHEAP - compared to liability coverage. SO PROTECT YOUR FAMILY - BUY UM COVERAGE!
8. Collision coverage is just what it sounds like. If you collide with something, your insurer will cover the damage to the car or pay you the market value of the car -- reduced by whatever the deductible is. When you decide on the deductible, you have to compare how much the premium on the coverage is compared to how much you can afford to pay on the damage to the car. It is a balancing act. The larger the deductible, the smaller the premium. I generally see $500 and $1000 deductibles now days. You have to decide what you can afford when picking your deductible.
9. Comprehensive or other than collision coverage is also pretty self explanatory. This coverage provides payment if your vehicle is damaged in some way other than in a collision. For example a hail storm -- or a fire. The deductible work the same as in collision coverage.
10. Personal Injury Protection (PIP) is a type of coverage that is mandated by the law for the insurance carrier to provide to you, unless you reject it in writing. Once you reject it in writing that rejection applies to ALL policies you purchase from then on, unless you unreject it in writing. This is a VERY important coverage. It will provide reimbursement to you for medical bills and lost wages you suffer due to an injury in a collision -- in addition to any claim you have against another driver. (One of the few times you can make a double recovery of your damages.) This coverage is cheap and very important if you incur medical bills -- even if you have health insurance. (Because health insurance has higher and higher deductibles and co pays, PIP is great to have to assist in paying those.)
11. Many insurance agents advise NOT purchasing PIP. Don't listen to them. PIP is second only to UM in protecting yourself, your family and those riding in your car if you are in an accident. PIP is sold in increments of $2500. The minimum is $2500. I suggest pricing it and buying as much as you can afford. Medical expenses have gotten outrageous. There are many times I see hospital emergency room bills over $10,000 where the person is treated and released and has only soft tissue injuries.
12. Medical Payments (Med Pay) coverage is very similar to PIP but is not mandated in the statutes. PIP is a much better buy than Med Pay. If you are going to buy this type of coverage, make sure you buy PIP and not Med Pay. (Med Pay only reimburses medical bills and not lost wages and Med Pay has to be repaid to the insurer if you make a recovery against a third party - no double recovery - and it cost about the same as PIP.) You get more bang for your buck with PIP.
13. Towing is another coverage. It is not expensive but not used much. You have to decide whether you can pay a towing bill if one arises.
14. Death benefits is another less purchased coverage. If you are killed in an accident, it will pay a death benefit to your family, estate or designated person. Usually this payment is available to pay or assist in paying funeral costs. This is a coverage for which each individual has to assess his or her individual need.
These are the main coverages available to be purchased when you go to buy auto insurance. If you have questions about this are any other issue with regard to accidents or insurance, contact Rick Freeman.
Here is what you should do to meet the law (specifically Texas law) and protect yourself and your loved ones:
1. Purchase at least the minimum required liability insurance and keep it paid up to date. You have to do this to legally drive down the road. Failure to carry at least the minimum coverage can be disastrous - legally, financially and emotionally, if you are in an accident that happens to be your fault. (And any of us can look away for a second and be in that accident.)
2. Once you have purchased the minimum liability coverage, you need to assess your needs. There are different coverages you can purchase and different needs you may have that someone else might not have.
3. You should select as much liability coverage as you can afford and evaluate how much you need to protect your assets. If you have a real estate or other property, cars, boats, money in the bank, retirement accounts, etc. That is potentially subject to being taken from you and applied to any judgment against you for an accident you caused. You should make sure that your assets are protected by purchasing high enough liability coverage to protect those assets. It is much cheaper to pay an insurance premium than it is to recreate all these other purchases, if they are taken from you to pay a judgment. (My father termed the failure to protect you assets in this manner "penny wise and pound foolish.")
4. The major coverages in addition to liability coverage are:
- uninsured/underinsured motorist coverage
- collision coverage
- comprehensive coverage (also known as "other than collision coverage)
- personal injury protection coverage
- medical payments coverage
- towing
- death benefit
6. Uninsured/underinsured motorist coverage (UM) is a VERY important coverage to carry. Anyone driving on the roads today should have UM in the same amount as their liability coverage. UM covers you and your family and anyone in your vehicle in case an uninsured or underinsured person causes an accident in which you are injured. In other words, it acts as the other driver's liability insurer -- which provides coverage to you and your family if the person who causes the collision is not responsible and does not buy insurance. Unfortunately, those who lack the responsibility to carry liability coverage are more likely to lack responsibility when they drive down the road - thereby causing more accidents.
7. UM is the MOST important coverage to buy, once you have your liability coverage. And you should purchase it in the SAME amount as your liability coverage. Why would you buy $100,000 worth of insurance to protect your assets and buy only $25,000 to protect your self and your family -- they are worth much more than all your assets. And the BEAUTY of UM coverage is that it is CHEAP - compared to liability coverage. SO PROTECT YOUR FAMILY - BUY UM COVERAGE!
8. Collision coverage is just what it sounds like. If you collide with something, your insurer will cover the damage to the car or pay you the market value of the car -- reduced by whatever the deductible is. When you decide on the deductible, you have to compare how much the premium on the coverage is compared to how much you can afford to pay on the damage to the car. It is a balancing act. The larger the deductible, the smaller the premium. I generally see $500 and $1000 deductibles now days. You have to decide what you can afford when picking your deductible.
9. Comprehensive or other than collision coverage is also pretty self explanatory. This coverage provides payment if your vehicle is damaged in some way other than in a collision. For example a hail storm -- or a fire. The deductible work the same as in collision coverage.
10. Personal Injury Protection (PIP) is a type of coverage that is mandated by the law for the insurance carrier to provide to you, unless you reject it in writing. Once you reject it in writing that rejection applies to ALL policies you purchase from then on, unless you unreject it in writing. This is a VERY important coverage. It will provide reimbursement to you for medical bills and lost wages you suffer due to an injury in a collision -- in addition to any claim you have against another driver. (One of the few times you can make a double recovery of your damages.) This coverage is cheap and very important if you incur medical bills -- even if you have health insurance. (Because health insurance has higher and higher deductibles and co pays, PIP is great to have to assist in paying those.)
11. Many insurance agents advise NOT purchasing PIP. Don't listen to them. PIP is second only to UM in protecting yourself, your family and those riding in your car if you are in an accident. PIP is sold in increments of $2500. The minimum is $2500. I suggest pricing it and buying as much as you can afford. Medical expenses have gotten outrageous. There are many times I see hospital emergency room bills over $10,000 where the person is treated and released and has only soft tissue injuries.
12. Medical Payments (Med Pay) coverage is very similar to PIP but is not mandated in the statutes. PIP is a much better buy than Med Pay. If you are going to buy this type of coverage, make sure you buy PIP and not Med Pay. (Med Pay only reimburses medical bills and not lost wages and Med Pay has to be repaid to the insurer if you make a recovery against a third party - no double recovery - and it cost about the same as PIP.) You get more bang for your buck with PIP.
13. Towing is another coverage. It is not expensive but not used much. You have to decide whether you can pay a towing bill if one arises.
14. Death benefits is another less purchased coverage. If you are killed in an accident, it will pay a death benefit to your family, estate or designated person. Usually this payment is available to pay or assist in paying funeral costs. This is a coverage for which each individual has to assess his or her individual need.
These are the main coverages available to be purchased when you go to buy auto insurance. If you have questions about this are any other issue with regard to accidents or insurance, contact Rick Freeman.
Wednesday, January 21, 2009
What to look for when selecting a personal injury lawyer.
An accident occurs -- someone close to you is injured or killed. What to do?
Many folks, once they have weathered the immediate storm, decide to hire a lawyer to assist them with investigating the accident and potentially pursuing a claim. As a lawyer with 30 years of experience representing individuals and family members, let me provide some insight into what you should be looking for when selecting a personal injury lawyer.
1. If you have a trusted lawyer, contact that lawyer about referrals. Lawyers generally know the reputations and qualifications of other lawyers and can give good advice. If the particular lawyer you know does not know someone, they will generally know who to contact to get good advice.
2. Many people don't have a trusted lawyer to contact. In that case, it takes more research to find a qualified personal injury lawyer. Don't turn to the first lawyer you see advertising on TV. And don't select the lawyer who has the TV ad you like the best. Most highly experienced and highly qualified lawyers don't need to advertise on TV to get their clients.
3. Having refused to select a TV advertising lawyer, the next step is to ask trusted friends or advisers if they know of any personal injury lawyers that they can recommend. If they do, that is the first step to selecting a lawyer.
4. Once you have a name or, even better, several names, start researching the lawyer's qualifications.
5. Are they Board Certified in Personal Injury Trial Law? Only approximately 3% of all lawyers in Texas are Board Certified in Personal Injury Trial Law. These lawyers have passed a specific test regarding personal injury lawsuits, have been recommended by other experienced lawyers and judges and have prepared and tried lawsuits involving personal injuries.
6. Does the lawyer have experience handling similar cases? Lawyers who have handled specific types of cases usually have greater knowledge about investigating and pursuing specific types of claims. This is especially true for complex cases, such as medical malpractice, defective products, construction related claims and trucking accident claims.
7. Contact the lawyer and find out who will be doing the work on the case. Will the experienced lawyer do the work or will some associate do the work?
8. Finally, research the background of the lawyer. Has the lawyer been involved in personal injury related organizations or associations. In Texas, the most well known organization of personal injury lawyers is called the Texas Trial Lawyer Association. If the lawyer has been extensively involved in that organization, he or she has been recognized by his or her peers as a highly qualified lawyer in the personal injury area.
9. Also, meet with the lawyer. See what the office and office staff are like. Do they meet you with a smile? Are the open to answering your questions? Do they seem to genuinely enjoy assisting persons? Or do they seem only interested in the fee they may earn?
10. If your friends or advisers don't have any names, then contact some lawyers who are Board Certified in Personal Injury Trial Law (you can find them listed in the yellow pages and by researching them on the internet) and follow the steps 6 - 9 above in researching those lawyers.
At the end of the selection process, hopefully you will have selected a well-qualified lawyer who you have confidence in and with whom you enjoy working.
Many folks, once they have weathered the immediate storm, decide to hire a lawyer to assist them with investigating the accident and potentially pursuing a claim. As a lawyer with 30 years of experience representing individuals and family members, let me provide some insight into what you should be looking for when selecting a personal injury lawyer.
1. If you have a trusted lawyer, contact that lawyer about referrals. Lawyers generally know the reputations and qualifications of other lawyers and can give good advice. If the particular lawyer you know does not know someone, they will generally know who to contact to get good advice.
2. Many people don't have a trusted lawyer to contact. In that case, it takes more research to find a qualified personal injury lawyer. Don't turn to the first lawyer you see advertising on TV. And don't select the lawyer who has the TV ad you like the best. Most highly experienced and highly qualified lawyers don't need to advertise on TV to get their clients.
3. Having refused to select a TV advertising lawyer, the next step is to ask trusted friends or advisers if they know of any personal injury lawyers that they can recommend. If they do, that is the first step to selecting a lawyer.
4. Once you have a name or, even better, several names, start researching the lawyer's qualifications.
5. Are they Board Certified in Personal Injury Trial Law? Only approximately 3% of all lawyers in Texas are Board Certified in Personal Injury Trial Law. These lawyers have passed a specific test regarding personal injury lawsuits, have been recommended by other experienced lawyers and judges and have prepared and tried lawsuits involving personal injuries.
6. Does the lawyer have experience handling similar cases? Lawyers who have handled specific types of cases usually have greater knowledge about investigating and pursuing specific types of claims. This is especially true for complex cases, such as medical malpractice, defective products, construction related claims and trucking accident claims.
7. Contact the lawyer and find out who will be doing the work on the case. Will the experienced lawyer do the work or will some associate do the work?
8. Finally, research the background of the lawyer. Has the lawyer been involved in personal injury related organizations or associations. In Texas, the most well known organization of personal injury lawyers is called the Texas Trial Lawyer Association. If the lawyer has been extensively involved in that organization, he or she has been recognized by his or her peers as a highly qualified lawyer in the personal injury area.
9. Also, meet with the lawyer. See what the office and office staff are like. Do they meet you with a smile? Are the open to answering your questions? Do they seem to genuinely enjoy assisting persons? Or do they seem only interested in the fee they may earn?
10. If your friends or advisers don't have any names, then contact some lawyers who are Board Certified in Personal Injury Trial Law (you can find them listed in the yellow pages and by researching them on the internet) and follow the steps 6 - 9 above in researching those lawyers.
At the end of the selection process, hopefully you will have selected a well-qualified lawyer who you have confidence in and with whom you enjoy working.
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