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What Determines Whether Damages Are Recoverable in a Personal Injury Case?

On Behalf of | May 14, 2024 | Personal Injury and Wrongful Death |

Recoverability or collectability is one of three basic, and equally important, factors to consider in determining whether you can recover compensation for your injuries or the death of a family member. These factors are 1) Liability, 2) Damages, and 3) Recoverability, and must all be present in order to have a successful personal injury or wrongful death case. For a general overview of the three factors, please see this article: How Do I Know If I Have A Strong Personal Injury Case?

Even if liability and damages can be established and legally proven, a judgment is worthless unless there is a source of funds from which to collect or recover the damages awarded. This step involves assessing the ability of the at fault party to pay the damages. In most cases, the at fault party will have insurance, such as automobile insurance or general liability insurance. Additionally, you may have insurance that will cover some or all of your damages, such as Under/Uninsured Motorist (UM) automobile insurance, which is often purchased as part of your own automobile insurance coverage and may be included with your rental vehicle insurance, if you opted to purchase and pay for same.

When the at fault party has insurance, their insurance company will essentially control the at fault party’s actions. Their insurance company is liable up to the coverage limits and will be very involved in the process:

  • Defense Representation: If the insured party is being sued or held liable for damages, their insurance company typically provides them with legal defense representation. This means they hire lawyers to defend their client’s interests, negotiate settlements, and represent them in court if necessary.
  • Coverage Limits: Insurance policies come with coverage limits, which represent the maximum amount the insurer will pay out for covered claims. In cases where the liable party has insurance coverage, the insurance company is responsible for compensating the injured party up to the policy limit. However, if the damages exceed the policy limit, the insured individual may be personally liable for the remaining amount. Either way, the insurance company has a duty to try and resolve the case for the benefit if the at fault/insured party.

Each state has its own minimum insurance coverage limits required to register and legally operate a vehicle. For example, Alaska has the highest requirements, with the minimum required automobile insurance coverage being $50,000 per person/$100,000 per accident for bodily injury and $25,000 for property damage.

Florida, on the other end of the spectrum, has the lowest requirements, with no requirement for bodily injury coverage and $10,000 for property damage. The other 48 states all require some level of bodily injury and property damage coverage, with the most common being $25,000 per person/$50,000 per accident for bodily injury and $25,000 for property damage. The above makes clear that with any serious accident or death case, even an insured driver who has the state required insurance coverage in place, there will probably not be nearly enough insurance coverage to secure compensation for all damages. In most such cases the emergency medical treatment bills alone will far exceed the insurance policy coverage limits.

The analysis of recoverability or collectability is especially important when dealing with an underinsured or uninsured at fault party. If, for example, you are involved in an accident with someone who is uninsured, has no assets, and is unemployed, recovering compensation for your damages might not be possible. Such an individual or company is considered “judgment proof” because there is nothing to collect or recover to pay a judgment. When the at fault party does not have sufficient insurance coverage to compensate for the full extent of your losses, you can be left without a source of compensation for your damages. By way of example, in the State of Florida alone, it is estimated that one in five drivers may be illegally driving with no insurance coverage, while others may be legally electing not to purchase bodily injury coverage. Most states have similar uninsured and underinsured statistics.

In order to address the very real problem of uninsured and underinsured drivers on the roads, many drivers elect to purchase their own Under/Uninsured Motorist (UM) insurance coverage via their own automobile insurance or as part of insurance coverage purchased with the rental of a vehicle. This is especially critical for visitors from outside of the United States of America whose home country automobile insurance coverage usually does not provide any coverage or protection for accidents taking place in the United States of America.

As such, paying extra to purchase Under/Uninsured Motorist (UM) insurance coverage can provide you with a source of compensation for your damages when the at-fault party is inadequately insured. Under/Uninsured Motorist (UM) insurance coverage protection is a type of insurance coverage designed to provide compensation for your damages in situations where the at-fault party either does not have insurance or does not have enough insurance to cover your losses adequately. In essence, Under/Uninsured Motorist (UM) insurance coverage acts as a safety net, stepping in to fill the gap left by the at-fault party’s insufficient or non-existing coverage.

Here are the basics of how Under/Uninsured Motorist (UM) insurance coverage works:

  • Coverage for Uninsured Drivers: If you are involved in an accident caused by an uninsured driver, your uninsured motorist coverage kicks in to compensate you for the damages incurred due to the accident.
  • Coverage for Underinsured Drivers: Similarly, if the at-fault driver is underinsured and their insurance policy limits are insufficient to cover your damages fully, your uninsured motorist protection can make up the difference. It ensures that you receive the compensation you need, even if the at-fault driver’s insurance coverage falls short.
  • Hit-and-Run Accidents: Uninsured motorist protection also provides coverage in hit-and-run accidents where the at fault driver flees the scene and cannot be identified or located. In such cases, your insurance policy steps in to cover your losses.

Having Under/Uninsured Motorist (UM) insurance coverage protection is a valuable tool for protecting yourself and your loved ones from the financial repercussions of accidents caused by uninsured or underinsured drivers. It provides peace of mind knowing that you have additional coverage to rely on in case of an accident caused by the fault or negligence of another.

When assessing your insurance coverage or renting a car, it is essential to review your Under/Uninsured Motorist (UM) insurance coverage protection limits and ensure that they are sufficient to cover your potential losses in the event of an accident. The details of Under/Uninsured Motorist (UM) insurance coverage vary from state to state. For example, in Florida the Under/Uninsured Motorist (UM) insurance coverage policy amount is in addition to the at fault party’s bodily injury insurance coverage (if at fault driver has $50,000 in applicable insurance coverage and you have $200,000 in UM coverage, you have a total of $250,000 in available coverage to compensate you for your damages.)

However, in California, the Under/Uninsured Motorist (UM) insurance coverage only applies if higher than the at fault party’s bodily injury insurance coverage (if at fault driver has $50,000 in applicable insurance coverage and you have $200,000 in UM coverage, you have a total of $200,000 in available coverage to compensate you for your damages.) It is important to consult with your insurance agent or legal counsel to ensure that you understand your insurance coverage options and make informed decisions about protecting yourself and your loved ones on the road.

If you want to watch a short video of John Urban, head of litigation at UTPA, speaking on the topic of collectability, please follow this link: What is Collectability?