Proving that someone is at fault for your injuries or the injuries to a loved one is only part of the battle. If the person at fault does not have the money to compensate you for your injuries and medical bills, a verdict or settlement for money damages cannot help you. As the saying goes, "You can't get blood from a stone."
This is where insurance comes in. There are many types of insurance. Your homeowner's insurance provides you money for some types of damage to your property and could also protect you from financial loss if a person is injured at your home or on your property. And if you suffer an injury at another person's home, you can recover for your injuries by pursuing a claim against that person's homeowner's insurance policy.
Auto insurance fulfills a role similar to homeowner's insurance. If your negligent driving causes an injury to another person, your auto insurance protects you from financial loss stemming from that person's injury. And if another person's negligent driving injures you, you can recover for your injuries by pursuing a claim against that person's auto insurance policy.
Professional liability insurance, such as a doctor's medical malpractice insurance, will pay out to you if the doctor's negligence causes an injury to a patient.
When you purchase insurance for yourself, such as automobile insurance, you are referred to as an "insured." The insurance company you have contracted with for the insurance policy is called the "insurer."
When you purchase insurance, you will receive a piece of paper that provides the basic information about your policy. This is called an "insurance declaration page." This is typically the first page of your insurance policy. It is not the same as proof of insurance. Instead, the declarations page serves as a quick guide to your insurance policy. The declaration page includes what is insured, the coverage limits, under which circumstances coverage is provided, and the time period covered by the insurance policy.
When you buy insurance in order to protect yourself or your property, it is called "first-party coverage." First-party coverage in an insurance policy provides coverage for losses suffered directly by you, the insured. For example, your homeowner's insurance policy may provide first party coverage for fire damage to your home.
"Third-party coverage," on the other hand, provides coverage for losses sustained by someone else for which you, the insured, may be legally responsible. This is also known as liability insurance. When you purchase liability insurance for your car, you are not purchasing insurance to cover yourself (though you may opt for first-party coverage by purchasing comprehensive, collision, medical payments, or uninsured/underinsured motorist coverage), you are purchasing coverage for injuries and damage that you may be held responsible for if you cause an accident and are found at-fault.
"Covered losses" include property damage or an injury that is covered by an insurance policy. For instance, if the insurance policy includes first-party coverage for fire damage to your home and a fire causes damage to your kitchen, then the damage is a covered loss and the insurer will cover the claim up to coverage limits specified on the declarations page.
"Coverage limits" refer to the maximum amount that the insurer will pay for covered losses. If you look at your declarations page for your auto insurance under liability, you will probably see two numbers, such as $25,000/$50,000, for your coverage limits. Most policies have multiple limits: an amount per person ($25,000) and an amount per accident ($50,000). The first figure specifies the maximum amount of coverage for each person while the second figure specifies the total amount the policy will pay.
Assume, for example, that you cause an accident that injures five people in another car. If the declarations page details your Liability Coverage as $25,000/$50,000, that means that your insurance will cover each person's injuries up to $25,000. If the other driver's medical expenses total $25,000 and the front seat passenger's medical expenses also total $25,000, that means that your insurance has already covered the maximum amount payable under your insurance policy. As a result, your insurance will not pay for any injuries suffered by the three remaining passengers in the other vehicle. In such an instance, the injured occupants of the other vehicle may pursue your personally to recover for their injuries.
Sometimes the coverage limits include an aggregate limit on all losses that an insurance company will pay during a policy term. If an aggregate limit applies to your insurance policy and you cause several different accidents during the period governed by the declarations page of your auto insurance policy, your insurance might not cover losses you cause that exceed the aggregate limit for losses sustained by others during the policy term.
If you have been injured as a result of another person's negligence, the at-fault person may have insurance that covers his or her act of negligence, such as automobile liability or medical malpractice/professional liability insurance.
Insurance policies generally impose two liability-related duties: 1) The duty to indemnify; and 2) The duty to defend.
The duty to indemnify means the insurance company must pay damages up to the insured's coverage limits if the insured is found to be at-fault. This means that if you win a lawsuit against an insured, negligent driver, the insurance company must pay for your damages up to the other driver's insurance policy's coverage limit.
The duty to defend means that the insurance company will hire legal counsel to represent the insured, negligent person in lawsuits in which an injured-party seeks compensation for an accident or incident covered by the negligent person's insurance policy. This duty to defend means that if you sue someone for causing your injuries, they will have an attorney.
They WILL have an attorney who will pursue every possible legal defense to decrease the amount of money that you will receive as compensation for your injuries.
That's why you NEED an attorney to represent your interests and try to recover for you as much money as possible to compensate you for your injuries.
Your insurance can also come into play if you have you been injured as a result of another's negligence. You may have insurance that covers you when a negligent driver does not have enough insurance. Uninsured/Underinsured Motorist Coverage is an example of a type of insurance that covers you when the other person's insurance proves insufficient to cover the damages caused by the other person's negligence.
Your health insurance serves as another example of a type of insurance that can cover you when another person's insurance proves insufficient to cover damages caused by the other person's negligence. If your medical bills exhaust the other person's coverage limits, your health insurance OR uninsured/underinsured coverage may help to pay the remaining balance.
If you recover from an at-fault party and your health insurance made payments on your behalf, then the insurance company has a subrogation claim, which means that you must reimburse your health insurance company for the amount your health insurance covered.
Uninsured/underinsured motorist (UM/UIM) coverage is an important type of automobile insurance to have as part of your insurance coverage. Although automobile insurance is mandatory by law, some people don't carry automobile liability insurance or carry only the minimum automobile liability coverage required by New Mexico law.
If an uninsured or underinsured motorist causes an accident that injures you, it's possible that your medical bills and other expenses will exceed the sum you can recover from the other driver. That's where uninsured/underinsured motorist (UM/UIM) coverage can protect you from financial ruin.
UM/UIM coverage is a type of first-party coverage in that you obtain it to protect yourself. With UM/UIM, your insurer will cover damages for which the law would impose liability upon the at-fault, uninsured/underinsured driver.
Uninsured Motorist Coverage
Here is an example of uninsured motorist coverage:
Another driver runs a stop sign and hits your car, causing you to accrue $10,000 in medical bills; unfortunately, the at-fault driver lacks insurance coverage altogether. Your insurance coverage includes $25,000 in UM/UIM bodily injury coverage. Since the at-fault driver is considered an "uninsured motorist," your insurer will pay your medical bills.
If your medical bills total $30,000, however, your insurer will pay up to the UM/UIM bodily injury coverage limits. In such a scenario, your insurance would cover $25,000 of the medical bills, leaving you on the hook for an additional $5,000.
Underinsured Motorist Coverage
Now here is an example of underinsured motorist coverage:
A negligent driver injures you by swerving into your car. You accrue $75,000 in medical bills. The driver only has liability insurance of $25,000. The insurer of the other driver is only responsible for $25,000 in medical bills. Your UM/UIM coverage limit is $100,000.
Since the amount of your UM/UIM coverage ($100,000) exceeds the other driver's liability insurance ($25,000) and your damages exceed the other driver's liability coverage, the law treats the at-fault driver as an underinsured motorist. The at-fault driver's insurance must pay $25,000 toward your medical bills and your underinsured motorist coverage will kick-in the $50,000 balance to ensure that all of your $75,000 medical bills are paid.
Under New Mexico law, the amount of your bodily injury liability coverage dictates the amount of UM/UIM coverage you can carry on an automobile. If, for example, you carry $25,000/$50,000 in bodily injury liability coverage on a car, then you can only carry $25,000/$50,000 in UM/UIM coverage.
Even with UM/UIM coverage you could still end up in the hole if your UM/UIM coverage combined with the at-fault driver's coverage prove insufficient to cover all your medical bills and property damages.
Here is an example of underinsured motorist coverage with coverage that remains insufficient to cover all your medical expenses:
A drunk driver crashes into a school bus, injuring 10 children. Timmy's medical bill's total $75,000. The drunk driver only has liability insurance of $25,000 per person, $50,000 per accident. The insurer of the drunk driver is only responsible for $25,000 of Timmy's medical bills because the coverage limit is $25,000 per person. All nine of the other injured children have to split the remaining $25,000 covered by the drunk driver's insurance because the drunk driver's insurance is capped at paying $50,000 to cover ALL bodily injuries stemming from one accident.
Thankfully, Timmy's family has UM/UIM coverage of $50,000, so their UM/UIM coverage kicks in an additional $25,000 to pay part of the first injured child's medical bills. So how can Timmy's family avoid financial ruin for injuries caused by a drunk driver? How can they collect the remaining $25,000 due to pay Timmy's $75,000 medical bills?
Well, let's hope Timmy's family carries UM/UIM coverage on more than one car. If you carry UM/UIM coverage on several cars, you can add the UM/UIM coverage for EACH vehicle to insure against a much greater potential loss. It's called "stacking."
New Mexico insurance law permits "stacking," which means that you can combine your UM/UIM coverage for every car for which you purchased UM/UIM coverage in order to determine whether a negligent driver is an underinsured motorist.
Let's just pretend Timmy's family owns three cars and on each car they carry $50,000 in UM/UIM coverage. Under this situation, the drunk driver's insurance will pay $25,000 toward Timmy's $75,000 medical bills. When you add the UM/UIM coverage limit for each of Timmy's family's three cars, Timmy has $150,000 in UM/UIM coverage. Timmy's UM/UIM coverage will pay the remaining $50,000 due to pay for all of Timmy's medical bills.
That's why it's important to carry more than the bare minimum in BOTH liability coverage and UM/UIM coverage on EVERY car you insure.
For example, if the at-fault driver carried $25,000 in liability insurance and you have $25,000 in UM/UIM for the car you were driving, the negligent driver would not be considered an underinsured motorist because your UM/UIM coverage does not exceed the other driver's insurance. If, however, you carry $25,000 in UM/UIM coverage on each of the two cars you own, you may "stack" (add) the two policies to equal $50,000 in UM/UIM coverage.
When you "stack" your UM/UIM coverage, the same at-fault driver qualifies as an underinsured motorist and your policy will cover up to $25,000 under your UM/UIM policy ($50,000 in UM/UIM minus the negligent driver's liability coverage of $25,000). If your damages exceed $50,000, then you will be able to recover up to $50,000 with $25,000 from the negligent driver and $25,000 from your own insurance company.
Now assume that the at-fault driver causes you to accrue medical bills of $100,000 and each of your family's four vehicles is insured with $50,000 of UM/UIM coverage. The at-fault driver's insurance will cover the first $25,000 of your medical bills and your UM/UIM coverage will pay the remaining $75,000 of your medical bills.
You may ask…. What about the excess coverage?
Remember Timmy? In his case, his family insured each of three vehicles with $50,000 in UM/UIM coverage, the drunk driver's insurance paid $25,000 toward the medical bills, and Timmy's UM/UIM coverage paid the remaining $50,000 due to pay all of Timmy's medical bills.
But what about Timmy's long-term needs, pain and suffering. And what about that drunk driver? Shouldn't somebody be punished for driving drunk? The UM/UIM coverage Timmy had still has $75,000 that hasn't been touched yet!
Where does that excess coverage come in to play?
Under the law, there are situations in which your UM/UIM coverage will pay for damages BEYOND your medical bills. Timmy's family can, for example, pursue the drunk driver for punitive damages for causing the accident. In such a case, Timmy may be able to recover punitive damages for the drunk driver's conduct from his own UM/UIM policy.
When your attorney understands the complexities of insurance and insurance law, you can better evaluate a case and determine the best strategies for litigation. When you sue somebody for negligently injuring you and they have insurance, their insurance company will hire an attorney to represent them. The at-fault driver's attorney will practice insurance defense law exclusively and will work zealously to minimize the total amount the at-fault driver's insurance company will pay to you.
You must ensure that you hire an experienced attorney who will represent your interests and fight to hold the wrongdoer responsible for his or her negligence. Call our office today to get started!