Details matter. This is especially true in personal injury cases where excess and umbrella insurance policies come into play. Excess and umbrella insurance policies usually only have to pay a claim if a settlement is made, or if their insured policyholder loses a lawsuit. It is important to know exactly what the insurance policy says in order to understand how much insurance coverage is offered by a particular insurance company’s policy, and when each policy is triggered to provide coverage.
The specific words and terms used in an insurance policy set when and how an injured claimant can recover from the insurance company. Insurance policies can be layered. If one insurance policy does not cover all of the damages, multiple policies can often be layered so that one policy fills in any gaps in insurance coverage left over by the other. But like any contract, insurance policies have to be read carefully and their terms have to be met in order to get the insurance company to pay what is due.
Most people are familiar with primary insurance plans, which are the insurance policies that are billed and charged first depending on which state’s laws apply. But there are many types of insurance policies.
Whether it is an excess or umbrella policy, an insurance policy’s specific wording sets when the insurance company must pay and when it does not have to.
What is an excess insurer?
An excess insurer is an insurance provider that covers a risk already covered by another policy. It increases the insurance coverage limit amount under the original, primary policy. For example, someone who already has insurance can purchase a second policy to increase his or her insurance coverage limits. Then, if primary insurance coverage is all used up, the excess policy can help cover the remaining scost of damages. An excess insurer can wait till a clear decision is made, or judgment entered before having to pay a claim. An excess insurer can enter into a settlement agreement with a claimant, but it does not have to do so. An umbrella insurer does not have that option.
What is an umbrella insurer?
Similar to excess insurers, an umbrella insurer is an insurance provider that provides an insurance policy that fills in any gaps in coverage left by a primary insurance policy. Umbrella insurance covers areas not covered by the primary insurance policy. These umbrella policies can provide more coverage for third-party auto policies, coverage for property and disability coverage. In some situations, this is cheaper than getting the same amount of extra coverage under the original, primary policy. Unlike an excess insurer, an umbrella insurer may have to fulfill certain duties to a particular claim, like enter into a settlement that is within its policy limits.
Some umbrella insurance policies have “following form” provisions, which basically exclude personal injury claims unless the primary insurer already provided personal injury coverage. This is to prevent having the umbrella insurer deal with having to defend against a personal injury lawsuit in cases where the primary insurer denied coverage. This also is a reason why umbrella insurers have somewhat affordable premiums. If an umbrella insurer had to defend every claim a primary insurer denied, it would not be a financially smart decision for the umbrella insurer to charge a relatively more affordable rate.
Once an insurance company gets notice of an insurance claim, each insurance provider has to investigate and evaluate the claim to see whether it has to provide coverage. Even if it is ultimately decided that the insurance provider does not have to provide coverage, such as defending or stepping into the shoes of its policyholder, it still must do an in-depth analysis of the claim and be a part of the settlement process, including settlement negotiations.
Typical insurance industry customs do not allow an umbrella or excess insurance company to deny that it has any duty owed to evaluate or modify a claim right away just because the underlying insurer has not used up his or her insurance policy limits. Failure to act in good faith can result in making the insurance company liable for bad faith claims, turning a small value case into a case that is worth millions. In many cases involving personal injury and property damage, the first underlying primary insurance policy limits are used up because the value in the amount of damages is more than the policy limits. Then, the excess carrier policy steps in to cover the remainder.
What is PIP insurance?
Personal injury protection (PIP) is insurance that covers medical and hospital bills no matter who was at fault in a car accident. Depending on the policy and the laws of the state you live in, the insurance policy may also cover lost wages and other expenses. It does not cover property damage, like damages to your vehicle in a car accident or truck accident. If there is a lot of medical damages, the insurance gets exhausted or used up and other insurance policies kick in if there are any available.
Relying on the specific words in insurance policies, insurance companies and providers often manipulate its policies’ terms so that they can avoid having to pay claims. Find the right personal injury lawyer who can defend your claims and hold each responsible insurance company liable.
Contact an experienced personal injury lawyer
Navigating complex personal injury cases and handling insurance companies can make the recovery process even more difficult. Experienced attorneys recognize the approaches and tactics used by insurance companies. The right attorney can advise you to help you identify the best step forward in getting you all of the compensation you deserve.
Are you trying to secure your financial recovery with the help of experienced attorneys? If so, we can help.
The Pusch & Nguyen Law Firm has helped countless Texans handle their insurance disputes. Our experienced trial lawyers have gone up against some of the biggest names in the insurance industry while successfully bringing home payouts for clients. Our successful reputation speaks for itself, and with offices in both Houston and San Antonio, we are well equipped to assist Texans who are in dire need of our services. Register online for a free case evaluation or call us today at 713-528-8108 (Houston) or 210-702-3000 to schedule an appointment with a member of our team.