Source: https://www.srfirm.com/uninsured-motorist/
Timestamp: 2019-04-20 15:12:13+00:00

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In spite of mandatory liability insurance laws in 47 of the 50 states, the Insurance Research Council estimates that U. S. drivers have a 14% chance of being hit by an uninsured driver. The odds vary significantly from state to state. Texas, for instance, is ranked 16th in overall numbers of uninsured drivers. It is estimated that 14.1% of all motorists on Texas streets and highways are uninsured. ( Florida has the dubious distinction of being number 1 with 26.7% uninsured. Our neighbors New Mexico, Oklahoma, Arkansas, and Louisiana have 20.8%, 10.5%, 16.6% and 13%, respectively.) (Insurance Research Council, Uninsured Motorists, 2015). The Texas Department of Insurance estimated in 2001 that the uninsured motorist population in Texas actually ranges from 21% to 28% (from county to county), with even higher percentages along the border with Mexico. (Testimony of Texas Insurance Commissioner Jose Montemayor to the Border Affairs Interim Committee of the Texas Legislature, March 6, 2001). With the NAFTA-driven growth of commerce and ever-increasing travel across the border, an estimated 1.6 million daily crossings (400 million annually) are occurring, with perhaps the majority of these vehicles being uninsured. ( Id.) Texas now has an insurance verification program. The number of uninsured drivers in Texas has dropped dramatically from a year ago — more than 38 percent — thanks in part to a 4-year-old program aimed at getting those drivers either insured or off the road.
It has long been the intention of the Texas Legislature and the Courts that all motorists carry liability insurance to pay for damages caused to other motorists. Forty-seven states, including Texas, have mandatory liability insurance laws. Texas passed its Motor Vehicle Safety Responsibility Act in 1981 to reduce the number of uninsured drivers, which had been steady at around 25% for several years. Passage of the legislation resulted in a sharp decrease in the number of uninsured motorists from 26.9% in 1981 to 8.5% in 1982. However, the rates slowly climbed again, and by only 1987 the rate had climbed to over 21% (Senate Interim Committee on Civil Justice: Report on Uninsured Motorists and Tort Reform Savings, October 1998). The enactment of Art. 5.06-1 of the Texas Insurance Code (originally enacted in 1967 to provide for uninsured motorist protection and amended in 1977 to add underinsured motorist coverage) mandated that all automobile insurance companies doing business in Texas offer UM/UIM coverage as a part of the standard Texas Personal Automobile Insurance Policy, with the purpose being to protect those so insured against the negligent acts of “financially irresponsible” motorists (Member Mutual Ins. Co. v. Hermann Hospital, 664 S. W. 2d 325 (Tex.1984)). In effect, by purchasing UM/UIM coverage, the policyholder was purchasing liability insurance for the uninsured or underinsured motorist (Sikes v. Zuloaga, 830 S. W. 2d 752 ( Tex. App.—Austin 1992, no writ)).
The limits of coverage were set at the statutory minimum liability limits (at the time, $10,000/$20,000/$5,000, but currently $30,000/$60,000/$25,000) but may be increased above the statutory minimum by payment of an additional premium. However, the UM limits may not be increased above the limits of liability coverage. (TEX. INS. CODE ANN., Art. 5.06-1(3)). A 30/60/25 policy will pay up to $30,000 for bodily injury to any one person with a total of $60,000 paid for all persons involved, with no more than $30,000 paid to any one person; and a total of $25,000 for the property damage of all claimants combined. (TEX. TRANS. CODE § 601.072).
The bodily injury portion of the UM policy is designed to pay without deductibles for past and future medical bills; funeral expenses; lost wages; loss of wage-earning capacity; physical pain; mental anguish; disfigurement; and permanent or partial disability. The property damage portion pays for repairs to the insured’s automobile if the cost of repairs does not exceed fair market value; the fair market value of the insured vehicle if the cost of repairs exceeds fair market value; damage to items in the car; and damage caused by the insured to the property of others (light poles, etc.) not due to negligence on the part of the insured; and rental car expenses. The deductible on property damage is set by statute at $250.00 per occurrence.
Because uninsured motorist claims are contract claims, the statute of limitations is four (4) years. (Franco v. Allstate Ins. Co., 505 S. W. 2d 789 (Tex. 1974)). The four years begins to run when the insurance company denies the uninsured motorist claim, not on the date of the accident giving rise to the claim. (Webster v. Allstate Ins. Co., 833 S. W. 2d 747 (Tex. App.—Houston [1 st Dist.] 1992, no writ)).
“Stacking” means collecting from more than one policy on the same claim. Nineteen states either allow or do not prohibit, stacking of UM/UIM benefits. In Texas, stacking is allowed (Stracener v. United States Automobile Association, 777 S. W. 2d 378 (Tex. 1989)) except where specifically prohibited by the policy. (Upshaw v. Trinity Companies, 842 S. W. 2d 631 (Tex. 1992)). However, only “inter-policy” stacking is allowed in Texas (the aggregation of coverage under more than one policy). For example, if one is injured by an uninsured motorist while one is occupying a vehicle with uninsured motorist coverage, one may collect on both the policy for the vehicle one is occupying and on one’s own personal uninsured motorist policy. (American Liberty Ins. Co. v. Ranzau, 481 S. W. 2d 793 (Tex. 1972)). “Intra-policy” stacking (the aggregation of limits for each car covered under one policy) is not allowed in Texas. (State Farm Mutual Ins. Co. v. Conn, 842 S. W. 2d 350 (Tex. App.—Tyler 1992, writ denied)). In other words, insuring two cars on one policy with $30,000 in coverage on each one will not yield $60,000 of UM/UIM coverage in Texas. Also, one cannot exhaust the liability limits of a policy and then recover UM/UIM benefits under the same policy. (Farmers Texas County Mutual Ins. Co. v. Griffin, 868 S. W. 2d 861 (Tex. App.—Dallas 1993, writ denied)).
A carrier may take a credit (“offset”) for Personal Injury Protection (“PIP”) benefits it has paid under the same policy if the policy contains a “non-duplication of benefits” provision (and they all now do). (Mid-Century Ins. Co. of Texas v. Kidd, 997 S. W. 2d 265 (Tex. 1999)). However, the offset is not allowed if it would result in the reduction of the UM/UIM coverage to an amount below the statutorily-mandated minimum, or, if the actual damages of the insured, less the PIP credit, still exceed the UM/UIM limits, no offset is allowed. (Dabney v. Home Ins. Co., 643 S. W. 2d 386 (Tex. 1982)). At least one court, however, (the Austin Court of Appeals in Laurence v. State Farm Mut. Auto. Ins. Co. , 984 S. W. 2d 351 ( Tex. App.—Austin [3 rd Dist.] 1999, pet. ref’d)) has held that the carrier may take an offset against UM benefits for any PIP benefits pay if the actual damages of the insured do not exceed the combined PIP and UM limits.
Benefits paid under the Med-Pay portions of the policy may not be offset against UM/UIM benefits. (Westchester Fire Ins. Co. v. Tucker, 512 S. W. 2d 679 (Tex. 1974)). Any attempt by a carrier to offset UM/UIM benefits by amounts paid under a workers’ compensation claim are invalid. (Hamaker v. American States Ins. Co. of Texas, 493 S. W. 2d 893 (Tex. App.—Houston [1 st Dist.] 1973, writ ref’d n. r. e.)).
There were 10,747 hit-and-run accidents reported within the city limits of Dallas in 2002 (almost 30 per day), and 9,491 in 2003 (26 per day). In each year, more than 500 of these involved serious bodily injuries or death. ( North Dallas PeopleNewspaper, February 29, 2004). Since the definition of “uninsured motorist” includes “unidentified motorist,” a hit-and-run driver is, by definition, an uninsured motorist under the terms of the insurance policy. The uninsured motorist policy will pay for damages caused by a hit-and-run driver only if the insured promptly reports the accident to the police.
“Underinsured Motorist” refers to a driver of a motor vehicle with liability insurance, but with not enough coverage to pay for the damages caused in the accident. An underinsured motorist is defined as a motorist operating an insured vehicle “on which there is valid and collectible liability insurance coverage with limits of liability for the owner or operator which were originally lower than, or have been reduced by payment of claims arising from the same accident to, an amount less than the limit of liability stated in the underinsured coverage of the insured’s policy.” (TEX. INS. CODE ANN., Art 5.06-1 (2) (b)).
Prior to 1993, a claimant had to first collect the full liability policy limits of the tortfeasor before being afforded the opportunity to make an underinsured motorist claim. The appellate courts held in 1993 that there is no requirement for a claimant to exhaust the policy limits of the tortfeasor’s liability policy in order to be entitled to claim UIM benefits from his own policy. (Olivas v. State Farm Mut. Auto. Ins. Co., 850 S. W. 2d 564 (Tex. App.—El Paso 1993, writ denied)). However, the carrier is given a credit for the full amount of the liability limits to be deducted from the total value of the claim before applying UIM benefits. (Leal v. Northwestern Nat. County Mut., 846 S. W. 2d 576 (Tex. App.—Austin 1993, no writ)).
The statutes and policy provisions regarding coverage of persons, vehicles, and injuries for underinsured motorists are the same as for uninsured motorists. Thus, the statutory minimum limits of coverage are currently $20,000/$40,000/$15,000 and may be increased above the statutory minimum by payment of an additional premium. However, the UIM limits may not be increased above the limits of liability coverage. (TEX. INS. CODE ANN., Art. 5.06-1(3)). A 20/40/15 policy will pay up to $20,000 for bodily injury to any one person with a total of $40,000 paid for all persons involved, with no more than $20,000 paid to any one person; and a total of $15,000 for the property damage of all claimants combined. (TEX. TRANS. CODE § 601.072).
The bodily injury portion of the UIM policy is designed to pay without deductibles for past and future medical bills; funeral expenses; lost wages; loss of wage-earning capacity; physical pain; mental anguish; disfigurement; and permanent or partial disability. The property damage portion pays for repairs to the insured’s automobile if the cost of repairs does not exceed fair market value; the fair market value of the insured vehicle if the cost of repairs exceeds fair market value; damage to items in the car; and damage caused by the insured to the property of others (light poles, etc.) not due to negligence on the part of the insured; and rental car expenses. The deductible on property damage is set by statute at $250.00 per occurrence.
As in uninsured motorist claims, because underinsured motorist claims are contract claims, the statute of limitations is four (4) years. (Franco v. Allstate Ins. Co., 505 S. W. 2d 789 (Tex. 1974)). The four years begins to run when the insurance company denies the underinsured motorist claim, not on the date of the accident giving rise to the claim. (Webster v. Allstate Ins. Co., 833 S. W. 2d 747 (Tex. App.—Houston [1 st Dist.] 1992, no writ)).
Uninsured and underinsured motorist coverage applies to the named insured and his/her “family members” residing in the same household, regardless of whether they are traveling in the insured vehicle or a vehicle owned or operated by another person; passengers in the insured vehicle; and anyone driving the insured vehicle with the permission, whether express or implied, of the owner. “Family member” is defined as a person who is a member of the named insured’s household and is related to the insured by blood, marriage, or adoption. A person may have more than one residence, especially when that person is a minor. A child may be considered a member of both parents’ household in the case of divorce, and may, therefore, be covered under both parents’ underinsured motorist policies. (Hartford Casualty Ins. Co. v. Phillips, 575 S. W. 2d 62 (Tex. Civ. App.—Texarkana 1978, no writ)). Coverage is also provided for the named insured or any family member injured by an uninsured or underinsured motorist while the insured or family member is a pedestrian, bicyclist, or otherwise, as long as the bodily injury evolved from coming into physical contact with the uninsured or underinsured vehicle.
Vehicles owned by the insured, but not insured under the policy, are excluded from coverage. Thus, payment of one premium does not cover all vehicles owned by a policyholder. (Beaupre v. Standard Fire Ins. Co., 736 S. W. 2d 237 (Tex. App.—Corpus Christi 1987, writ denied)).
In fact, any vehicle owned by, furnished to, or available for the regular use of the named insured, falls within the exclusions. (Reyes v. Texas All Risk General Agency, Inc., 855 S. W. 2d 191 (Tex. App.—Corpus Christi 1993, no writ)).
Thus, a passenger injured as a result of negligence on the part of an insured driver may collect from the liability portion of the policy, but not the underinsured motorist portion of the same policy. (Rosales v. State Farm Mutual Ins. Co., 835 S. W. 2d 804 (Tex. App.—Austin 1992, writ denied)). However, at least one court has held that the exclusion is not effective where the injured party was a passenger in a vehicle owned by his employer and driven by an uninsured co-employee. (Briones v. State Farm Mutual Ins. Co., 790 S. W. 2d 70 (Tex. App.—San Antonio 1990, writ denied)).
The State Board of Insurance, pursuant to provisions of the Insurance Code, allows the exclusion of vehicles owned or operated by governmental entities. (TEX. INS. CODE ANN., Art. 5.06-1 (2) (c)). In the standard insurance policy, such vehicles are excluded from the definition of “underinsured vehicles.” (Francis v. International Service Ins. Co., 546 S. W. 2d 57 (Tex. 1976)). Because of the provisions of the Texas Tort Claims Act, state or municipal vehicles are excluded up to $250,000 per person, $500,000 per accident, and $100,000 for property damage. (TEX. CIV. PRAC. & REM. CODE ANN., § 101.023 (a) and (c)). Against all other branches of government, the exclusion is valid for claims up to $100,000 per person, $300,000 per accident, and $100,000 for property damage. (TEX. CIV. PRAC. & REM. CODE ANN., § 101.023 (b)).
This exclusion applies only if the government employee were in the course and scope of his employment at the time of the occurrence.
The question as to whether an insurance company is liable for punitive damages under a UM or UIM claim has never been answered by the Texas Supreme Court, and the Texas Courts of Appeal are split on the issue. In two older decisions, the appellate courts held that UM coverage did include punitive damages. (Dairyland County Mutual Ins. Co. v. Wallgren, 477 S. W. 2d 341 (Tex. App.—Fort Worth 1972, writ ref’d n. r. e.) and Home Indemnity Co. v. Tyler, 522 S. W. 2d 594 (Tex. App.—Houston [14th Dist.] 1975, writ ref’d n. r. e.)). While the Dairyland case has never been reversed, the ruling in the Tyler case was explicitly abandoned by the Houston [14th Dist.] Court in Milligan v. State Farm Mut. Auto. Ins. Co., 940 S. W .2d 228 (Tex. App.—Houston [14th Dist.] 1997) and both cases have been criticized and distinguished more than once.
All recent decisions have held that an insurance company is not liable for punitive damages under a UM or UIM claim. (Vanderlinden v. United Service Auto Association Property & Casualty Ins. Co., 885 S. W. 2d 239 ( Tex. App.— Texarkana 1994); State Farm Mut. Auto. Ins. Co. v. Shaffer, 888 S. W. 2d 146 (Tex. App.—Houston [1 st Dist.] 1994); Milligan v. State Farm Mut. Auto. Ins. Co., Id.)).
The reasoning of the Courts in refusing to uphold punitive damages awards usually rests upon the interpretation that the Motor Vehicle Safety Responsibility Act was created to compensate injured motorists only for bodily injury and not for punitive damages, which are intended to punish and deter the wrongdoer.
Since the Texas Legislature has occupied itself mostly with “tort reform” legislation, primarily in the area of medical malpractice (and laying the groundwork through Proposition 12 to be able to cap non-economic damages in all personal injury claims), no significant legislation regarding UM/UIM claims has been passed in the last several sessions. HB 3588, passed during the 78th Legislative Session, charged the Department of Public Safety and the Department of Insurance to jointly conduct a study to determine the feasibility, affordability, and practicability of using a database interface software system for the verification of liability insurance on motor vehicles in Texas. The task force announced its intentions to present its findings to the 79th Legislative Session and urge passage of statutes strengthening the mandatory liability insurance laws in Texas (HB 3588 Feasibility Study of an Interface Motor Vehicle Financial Responsibility Verification System, October 18, 2004). Overshadowed by school financing woes, the legislature apparently never got around to considering the findings (if any) of the task force.
While the vast majority of the cases decided in Texas over the past few years have merely confirmed decades-old precedents, there have been a few that significantly impact UM/UIM litigation. To follow is a summary of the major cases handed down since 2001.
Allstate Insurance Company v. Rhonda Bonner, 51 S. W. 3d 289 ( Tex. 2001)—Rhonda Bonner had an automobile insurance policy with Allstate containing both PIP and UM/UIM provisions. Bonner was injured in an accident, incurred $1,802.00 in chiropractic bills, and submitted these bills with an application for PIP benefits, which Allstate acknowledged within 15 days as required by Tex. Ins. Code art. 21.55 §2. Allstate reduced the bills to $1,619.00 and paid Bonner this amount. After receiving that money, Bonner submitted a notice of a UM claim to Allstate. Allstate did not acknowledge the UM claim until 36 days after receipt. Allstate later denied Bonner’s UM claim and Bonner sued Allstate to recover UM benefits. The jury awarded Bonner $1,000.00 compensation for her chiropractic care and nothing for physical pain or mental anguish. The jury also awarded $7,500.00 for Bonner’s attorney’s fees. Because Bonner’s policy contained a nonduplication-of-benefits provision, and because the $1,619.00 PIP payment exceeded the $1,000.00 UM damage award, the trial court rendered judgment that Bonner takes nothing. The court also declined to award the attorney’s fees and taxed costs of court against Bonner, who appealed. The court of appeals affirmed the take-nothing judgment for the UM benefits but reversed the trial court’s denial of attorney’s fees and assessed all costs of court for trial and appeal to Allstate. The Supreme Court reversed the court of appeals, holding that, even though Allstate failed to acknowledge Bonner’s UM claim within 15 days as required by statute, Bonner did not present a claim for which Allstate is liable. Allstate’s payment of $1,619.00 in PIP benefits served as a policy defense to the UM claim since Allstate paid Bonner more than her UM damages. By doing so, Allstate completely defeated Bonner’s UM claim and, under the terms of the policy, was not liable to her. Thus, no attorney’s fees were awardable.
Dairyland Co. Mut. Ins. Co. of Texas v. Val Casburg, Individually and as Personal Representative of the Estate of Charles Casburg, Deceased, and on Behalf of all Others Similarly Situated, 63 S. W. 3d 590 (Tex. App.—Beaumont 2001)—The widow of Charles Casburg, who had signed a rejection of UM/UIM benefits and was then killed by an uninsured driver, sought class status to have the rejection form invalidated. The court found that the question as to whether an insured made a “knowing waiver” was an individual, not class, issue.
Josefa Girard v. Texas Farmers Ins. Co., 2001 Tex. App., LEXIS 7192, No. 05-00-01520-CV, Court of Appeals of Texas, Fifth District, Dallas [Unpublished Opinion (October 25, 2001)]—Josefa Girard purchased an automobile insurance policy containing UM/UIM coverage. Girard’s father was later killed in an accident caused by an uninsured motorist. Girard, who was not present when her father was killed, then filed a claim under her UM/UIM policy, claiming mental anguish resulting from her father’s death constituted “bodily injury” under the policy. Not surprisingly, the court ruled that mental anguish damages suffered by a person not involved in an actual accident are not “bodily injuries” under the terms of the automobile policy.
Texas Farm Bureau Mutual Ins. Co. v. Jeff A. Sturrock, 146 S. W. 3d 123; ( Tex. 2004)—Sturrock was injured when his foot became entangled as he got out of his vehicle and he fell. He made a claim for PIP benefits. The court ruled that the term “motor vehicle accident” does not necessitate any physical impact, provided the facts demonstrate causation between the use of the vehicle and the accidental injury incurred by the claimant.
Dallas County Hospital District d/b/a Parkland Health & Hospital System v. Jason Wiley, by and through his Next Friend, Duane Pat Wiley, 2002 Tex. App., LEXIS 4170, No. 05-01-01031-CV, Court of Appeals of Texas, Fifth District, Dallas [Unpublished Opinion, June 12, 2002)]—This case merely reaffirmed the long-standing premise that, by legislative intent, uninsured motorist insurance proceeds are specifically excluded from attachment by a hospital lien.
Old American County Mutual Fire Ins. Co. v. Zeferino Sanchez, 81 S. W. 3d 452 ( Tex. App.—Austin 2002 no writ)—Zeferino Sanchez’s wife purchased a policy to cover the three vehicles she and her husband had. The policy when issued, however, listed two vehicles and not the third, a truck. Mr. Sanchez was underneath said truck when an uninsured motorist struck the truck, causing it to fall on Mr. Sanchez and sever his spinal cord. Mrs. Sanchez had rejected both PIP and UM/UIM when she purchased the policy. The carrier sought a declaratory judgment that no coverage existed on three grounds: (1) that an exclusion to coverage applied while an insured was “occupying” a vehicle owned but not insured under the policy; (2) that the wife had rejected coverage; and (3) that an exclusion to coverage applied because the insured was “struck by” a vehicle owned but not insured under the policy. The trial court granted Old American a summary judgment and the Sanchezes appealed. The appellate court reversed and remanded. As to point (1), that Mr. Sanchez was “occupying” a vehicle owned but not insured under the policy, the court held that the definition of “occupying” includes “in, upon, getting in, on, out or off,” but not “under.” Thus, the carrier could not deny benefits based on the premise that Mr. Sanchez was “occupying” the vehicle.
As to point (3), that the “struck by” exclusion precludes coverage, the court found that “struck by” refers to the causative force of the collision. Since Mr. Sanchez’s vehicle was parked and thus passive, and the uninsured motorist’s vehicle was the moving vehicle, the court concluded that the uninsured motorist’s vehicle was the striking or “causative force” that struck Mr. Sanchez, not his passive, unscheduled truck.
Sharon Menix v. Allstate Indemnity Co., 83 S. W. 3d 877 ( Tex. App.—Eastland 2002, writ denied)—This case is important because it defines the two types of prejudgment interest and when they are awardable. The court coined the phrases “Cavnar-type” prejudgment interest [due to its genesis in Cavnar v. Quality Control Parking, Inc., 696 S. W. 2d 549 ( Tex. 1985), where the court adopted a rule allowing recovery of prejudgment interest on personal injury, wrongful death, and survival actions, reasoning that prejudgment interest was due as additional damages from the tortfeasor because the “primary objective of awarding damages in civil actions has always been to compensate the injured plaintiff, rather than to punish the defendant”] and “Henson-type” prejudgment interest [defined in Henson v. Southern Farm Bureau Casualty Ins. Co., 17 S. W. 3d 652, 43 Tex. Sup. Ct. J. 622 ( Tex. 2000), distinguishing prejudgment interest based on the tortfeasor’s obligations from that based upon the insurance companies’ obligations. In Henson, the damages awarded by the jury against the tortfeasor greatly exceed the UIM policy limit, thus obviating the necessity to calculate Cavnar-type prejudgment interest.] In Menix, (as opposed to the facts in Henson) the UIM policy limit exceeded the number of actual damages the tortfeasor caused. Therefore, the prejudgment interest that Menix was entitled to from the tortfeasor would be payable as Cavnar-type “additional damages” under Menix’s UIM policy, to the extent that such additional damages did not exceed Menix’s policy limit.
Kathryn Payne and Carnell Gulley v. Mid-Century Ins. Co. of Texas, 2003 Tex. App., LEXIS 7518, No. 03-02-00641-CV, Court of Appeals of Texas, Third District, Austin [Memorandum Opinion (August 29, 2003)]—This is actually a PIP case, but I believe the rationale will be applied to UM/UIM cases as well. Kathryn Payne had an automobile insurance policy with Farmers Insurance, in which she signed a “waiver” rejecting PIP coverage in 1996. In 2001, Farmers issued Kathryn a new policy under its “Mid-Century” group. The policy was issued without PIP and no new PIP waiver was obtained from Kathryn. After having an accident, Kathryn applied for PIP benefits, which were denied by Mid-Century. Kathryn sued and the trial court granted Mid-Century’s motion for summary judgment. On appeal, the Austin court affirmed the trial court’s judgment, holding that the prior insurer (Farmers) and the current insurer (Mid-Century) were “affiliated companies” as that term is defined in Tex. Ins. Code Ann. Art. 5.06-(3); and, under these facts, the current policy was merely a renewal policy, thus, the insurer was not required to provide PIP in the current policy as the insured had rejected the coverage in writing in connection with a previous policy issued by an affiliated insurer.
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Smith v. Nationwide Mutual Insurance Company et al., 2003 Tex. App., LEXIS 5056, No. 04-02-00646-CV, Court of Appeals of Texas, Fourth District, San Antonio (October 24, 2003) (pet. denied 2004)—Mr. Smith’s vehicle was damaged after it hit a metal loading ramp that detached and fell from a tractor-trailer rig traveling beside him on a San Antonio freeway. The truck driver did not stop and Mr. Smith was unable to obtain identifying information about the truck. He then filed a claim for uninsured motorist benefits with Nationwide, his insurer. Nationwide denied the claim based on Article 5.06-1(2)(d) of the Texas Insurance Code, which requires “actual physical contact” between the insured vehicle and the unknown or uninsured vehicle or trailer. The Court upheld the denial of coverage, holding that Nationwide’s policy only provides UM coverage when there is contact between the insured vehicle and an uninsured motor vehicle. The policy defines an “uninsured motor vehicle” as “a land motor vehicle or trailer of any type . . . which is a hit and run vehicle whose operator or owner cannot be identified and which hits . . . a vehicle which you or any family member are occupying or your covered auto . . . .” The Court held that the ramp was neither a “land motor vehicle or trailer” and thus did not qualify as an uninsured motor vehicle.
Trinity Universal Ins. Co. v. Lilith Brainard, et al., 153 S. W. 3d 508 ( Tex. App.— Amarillo 2004, no writ)—Edward Brainard, II, was killed in a head-on collision with a piece of heavy equipment. When it was discovered by the attorney for the heirs that Premier, the owner of the equipment, had only a $1,000,000.00 liability policy limit, a claim was made under the deceased UIM policy issued by Trinity Universal Insurance Company (“Trinity”). A lawsuit was filed against Premier and Trinity was brought in by 3 rd Amended Petition. Among other issues, the heirs claimed Trinity had breached its contract for failing to pay benefits and that it was also liable for Plaintiffs’ attorney’s fees. Premier subsequently tendered its policy limits and was dismissed from the suit, which continued to trial against Trinity. Following a jury trial in which the jury awarded $1,010,000 in actual damages and $100,000.00 in attorney’s fees, the court applied an offset of $1,005,000.00 (for PIP and the amount of the Premier settlement), leaving a judgment against Trinity for $5,000.00, plus the $100,000.00 in attorney’s fees, but denied Plaintiffs’ request for prejudgment interest. Trinity appealed. The appellate court reversed the trial court’s judgment awarding attorney’s fees and rendered a judgment that no attorney’s fees were to be awarded. The reasoning of the court was based on Sprague v. State Farm Mut. Auto. Ins. Co., 880 S. W. 2d 415 (Tex. App.—Houston [14th Dist.] 1993, writ denied), and Sikes v. Zuloaga, 830 S. W. 2d 752 (Tex. App.—Austin 1992, no writ) wherein the courts held that attorney’s fees were not recoverable before determination of the fault of the underinsured motorist and the number of damages. [Note that a contrary finding was made in Allstate Ins. Co. v. Lincoln, 976 S. W. 2d 873 (Tex. App.—Waco 1998, no pet.); Whitehead v. State Farm Mut. Auto. Ins. Co., 952 S. W. 2d 79 ( Tex. App.— Texarkana 1997, rev’d on other grounds, 988 S. W. 2d 744 ( Tex. Sup. Ct. J. 404 (Tex. 1999); Novasad v. Mid-Century Ins. Co., 881 S. W. 2d 546 (Tex. App.—San Antonio 1994, no writ)]; and State Farm Mut. Auto. Ins. Co. v. Nickerson, Id.] The court affirmed the trial court’s denial of prejudgment interest on the basis that the insurance contract obligates the insurer to pay damages because of “bodily injury or property damage” but does not obligate the insurer to pay interest on damages or the amount of a judgment if obtained against the underinsured motorist.
McKiddy v. Trinity Lloyd’s Insurance Company, 155 S. W. 3 rd 307 ( Tex. App.—Dallas 2004)—McKiddy was a passenger in a vehicle insured by Trinity Lloyd’s Insurance Company. The policy included UM/UIM coverage. The vehicle in which McKiddy was a passenger slid off an icy road and the occupants of the vehicle, including McKiddy, exited the vehicle. McKiddy was injured when a second vehicle also slid off the road and struck him. He received the liability limits from that vehicle and applied for UIM benefits from Trinity. The issue before the Court was whether McKiddy was “occupying” the vehicle at the time he was struck and whether the term “occupying” is ambiguous. The Court held that there was no causal connection between McKiddy’s injuries and the covered vehicle in order to base coverage on the “getting in, on, out, or off” policy language and that such language was not ambiguous. It is important to note that there was no evidence that McKiddy was touching, or was struck by, the insured vehicle.
In a hit-and-run claim, the insured must prove that “actual physical contact . . . occurred between the motor vehicle operated by such unknown person and the person or property of the insured.” (TEX. INSUR. CODE, § 5.06-1 (2) (d)). However, the Courts have interpreted the “physical contact” requirement to be satisfied by indirect contact. For instance, if the uninsured motorist hits another car and propels it into the insured, this will constitute physical contact. (Latham v. Mountain States Mutual Casualty Co., 482 S. W. 2d 655 ( Tex. App.— Houston [1 st Dist.] 1972, writ ref’d n. r. e.). This indirect contact rule applies only where the unidentified motorist has hit another vehicle and started a chain reaction. (Guzman v. Allstate Ins. Co., 802 S. W. 2d 877 ( Tex. App.—Eastland 1991, no writ). Contrast this with the situation where the unidentified (thus, “uninsured”) vehicle cuts in front of the insured, causing the insured to strike another car while trying to evade the uninsured motorist. In this instance, the courts have ruled there was no contact and, thus, no coverage. (Goen v. Trinity Universal Ins. Co., 715 S. W. 2d 124 ( Tex. App.— Texarkana 1986, no writ; Mayer v. State Farm Mut. Auto. Ins. Co., 870 S. W. 2d 623 (Tex. App.—Houston [1 st Dist.] 1994)). Other examples of the “physical contact” rule not being satisfied: (a) when the insured was the third vehicle in a series rear-ender when the first vehicle slammed on brakes while attempting to avoid furniture dropped on the roadway by an unidentified truck; (Republic Ins. Co. v. Stoker, 867 S. W. 2d 74 (Tex. App.—El Paso 1993) (b) a drive-by shooting; (Collier v. Employers Nat’l Ins. Co., 861 S. W. 2d 286 (Tex. App.—Houston [14th Dist.] 1993, writ denied) and (c) an object falling from an unidentified vehicle and striking the insured. (Williams v. Allstate Ins. Co., 849 S. W. 2d 859 ( Tex. App.— Beaumont 1993, no writ). Contrast the Collier decision, however, with Mid-Century Ins. Co. of Texas v. Lindsey, 942 S. W. 2d 140 ( Tex. App.—Texarkana, 1997) where the appellate court upheld the trial court’s ruling in favor of an underinsured motorist benefits claimant who was injured when a gun accidentally discharged in an adjacent vehicle.
Every Texas automobile insurance policy automatically carries UM/UIM coverage unless it has been expressly rejected in writing by means of a waiver signed by the insured. However, once waived, always waived, and the insurer never has to offer the coverage again after receiving a written rejection. The coverage may, however, be reinstated at any time as a result of a written request from the insured (along with the applicable premium). (TEX. INS. CODE ANN., Art. 5.06-1(1)). UM/UIM coverage exists as a matter of law if the carrier cannot produce proof of a signed rejection. (Employers Casualty Co. v. Sloan, 565 S. W. 2d 580 ( Tex. App.—Austin 1978, writ ref’d n. r. e.).
The presumption applies only to the minimum amount required by the statute (currently 20/40/15). If the insured seeks coverage with a different carrier, the written rejection of coverage obtained by the first carrier is ineffective as to the second carrier and a new waiver must be signed if coverage is to be rejected. Note the exception to this rule if the second carrier is an “affiliate” of the first (see Payne et al. v. Mid-Century, supra).
Once the insured raises the issue of an uninsured motorist claim, the burden of proof shifts to the carrier to prove that the presumed uninsured driver is, in fact, insured. However, the burden of proving the uninsured driver was negligent (and that this negligence was a proximate cause of the accident and claimant’s damages) remains with the claimant. The carrier may refuse to pay if the claimant cannot establish liability on the part of the uninsured motorist. The burden of proving that the negligent driver was underinsured is always on the claimant. (TEX. INS. CODE ANN., Art. 5.06-1(7)).
If an injured victim settles his claim with either the liability carrier or, if the tortfeasor is uninsured, with the tortfeasor himself, without first obtaining written permission to do so from the UM/UIM carrier, the injured party has waived his right to make a claim under his UM/UIM coverage. (Traylor v. Cascade Ins. Co., 836 S. W. 2d 292 ( Tex. App.— Dallas 1992, no writ). The purpose of this rule is to protect the subrogation rights of the UM/UIM carrier, (Dairyland Co. Mutual Ins. Co. v. Roman, 498 S. W. 2d 154 ( Tex. 1973) and also applies in an underinsured motorist claim. (State Farm Mut. Auto. Ins. Co. v. Azima, 896 S. W. 2d 177 ( Tex. 1985) However, the carrier may not void coverage unless it can show that it was prejudiced by the insured’s settlement before obtaining permission. (Hernandez v. Gulf Group Lloyds, 875 S. W. 2d 691 (Tex. 1994) For instance, if the insured settles with the underinsured motorist for the full liability policy limits and the underinsured motorist has no leviable assets, the UM/UIM carrier has not been prejudiced because subrogation was unlikely. ( Id.) No consent to settle is required with regard to a non-vehicular tortfeasor. (Simpson v. GEICO, 907 S. W. 2d 942 ( Tex. App.— Houston [1 st Dist.] 1995, no writ) Also, denial of coverage waives the applicability of the consent clause. (Ford v. State Farm Mut. Auto. Ins. Co., 550 S. W. 2d 663 ( Tex. 1977).
Hospital liens are created by Texas Property Code § 55.001, et seq. The lien attaches to a judgment, settlement, or other cause of action arising from an injury for which the injured party is hospitalized. However, such liens do not attach to insurance policies because they are not “public liability insurance.” (Members Mutual Ins. Co. v. Hermann Hospital, Supra.).
Workers’ Compensation Liens are authorized under the Texas Labor Code § 417.001 and provide subrogation rights to the workers’ comp carrier whenever the injured worker has the right to collect from a third party who is or becomes liable for the employee’s injuries. The lien is enforceable against the worker, the third party, the third party’s insurer, and the worker’s own attorney, to the extent the attorney received any benefits. (Home Indemnity Co. v. Pate, 866 S. W. 2d 277 ( Tex. App.— Houston [1 st Dist.] 1993, no writ). However, the lien does not attach to UM/UIM benefits. (Bogart v.Twin City Fire Ins. Co., 473 F.2d 619 (5th Cir. 1973)).
Medicare Liens are governed by 42 U. S. C. § 1395y and provide that the federal government has the right of subrogation where a Medicare payment has been made and there is a right to payment under a “primary plan.” The term “primary plan” is defined to include not only group health plans but also automobile insurance policies and even no-fault coverage. Regulations have broadened the scope of Medicare subrogation to include uninsured motorist benefits and underinsured motorist benefits. (42 C. F. R. § 411.50 (b)).
As in all matters dealing with automobile insurance coverage, there are rules determining which policy will pay first when more than one policy is applicable. For example, when one is riding in a vehicle driven by the owner of that vehicle, and that vehicle is struck by an uninsured motorist, the policy on the car in which one is a passenger will be deemed “primary” for purposes of determining priority. This means that the passenger must exhaust the coverage on the vehicle in which he or she was a passenger at the time of the collision before he or she may draw benefits from his or her own individual policy (which is referred to as “secondary”). The same rules apply to Personal Injury Protection benefits. Of course, if the car in which one is riding has no UM or PIP coverage, then one’s own personal policy becomes primary.
Testimony of Texas Insurance Commissioner Jose Montemayor to the Border Affairs Interim Committee of the Texas Legislature, March 6, 2001.

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