In a perfect world, insurance policies would cover all damages from an auto accident.
When this does not happen, accident victims often want to know if a settlement can exceed an insured’s policy limits.
Because Texas has complex rules about collecting personal injury settlements over insurance limits, it is important to discuss your case with an experienced auto accident attorney.
Texas Auto Insurance Policy Limits
Texas requires every automobile owner to purchase basic liability insurance. The Texas minimum liability limit for coverage is called a 30/60/25 policy.
This coverage includes $30,000 for bodily injury to a single person, $60,000 for bodily injury for any one accident, and $25,000 in property damage coverage.
In cases where a claim exceeds Texas auto insurance policy limits, anything over that amount may be the policyholder’s responsibility.
What Happens If Accident Damage Exceeds Your Car Insurance
What happens if accident damages exceeds your car insurance? Unfortunately, there are several reasons why it is unlikely for an accident victim to attain more than their or the at-fault driver’s applicable policy limits.
First, any settlement a victim reaches with an at-fault driver’s insurance company will require the victim to release the at-fault person from further liability.
A lawsuit settlement for a claim exceeding an at-fault driver’s policy limit is also unlikely, as it requires the at-fault driver to have personal wealth that well exceeds their liability limits.
This is especially true in Texas, where under the Texas Property Code, Sections 41.001, most of a policyholder’s assets are exempt from being collected to enforce a judgment.
Finally, Texas considers lawsuit judgments to be unsecured debt. Furthermore, most judgments in Texas civil proceedings are fully dischargeable through bankruptcy.
This means that even if a victim could obtain a judgment against an at-fault driver, the driver could discharge the judgment in bankruptcy court.
Because the judgment would be an unsecured debt, it would be last in line to be paid out in a bankruptcy proceeding.
The only exception falls under the Texas Stowers Doctrine.
Stowers Doctrine in Texas
The Stowers Doctrine holds that an insurance company must use reasonable care when handling a policyholder’s claim.
If an insurance company can reasonably settle a claim for an amount within the policy limits, the insurance company may be liable to the insured for any excess judgment if the claim fails to settle.
Since, with rare exceptions, the at-fault driver’s liability policy limits an auto accident victim’s recovery, your best action after an auto accident is to speak with an attorney.
A skilled auto accident attorney can explain all possible options.
Armstrong Lee & Baker LLP—Experienced Auto Accident Attorneys You Can Count On
If you or someone you care about was injured in an auto accident, please do not hesitate to contact us at 832-709-1124 for a free consultation.
At Armstrong Lee & Baker LLP, our experienced auto accident attorneys have dedicated their careers to fighting for your rights.
Our passionate advocates believe in carefully evaluating every case that comes through our door, and we never take a fee unless you win.