What Your Auto Insurance Does Not Cover Might Surprise You
Nobody likes having to call an auto insurance company and report they were in a car accident. But one thing that can truly make the experience worse is to receive a letter from the insurance company a few days later stating that your accident is excluded from coverage under the policy. Some of the situations in which Your coverage may be denied under a Texas auto insurance policy exclusion may completely shock you. When the accident is caused by a family member, you may be partially excluded from coverage under your policy. You can also lose the ability to make a claim if the other driver is excluded from coverage because he did something intentionally to cause an accident. Lastly, you may lose coverage if either driver in the accident is driving a vehicle they own but is not named in the policy.
Surprising Limits on Liability to Family Members
Suppose you decide to let your new teen driver get some experience as the family goes to dinner one night and your teen runs a red light causing your family members serious injuries. As a responsible adult, you prepared for this by making sure you have $500,000 in liability insurance coverage and another $500,000 in Uninsured/Under-Insured Motorist insurance. You have nothing to worry about, right? Wrong.
Texas insurance policies typically contain a Family Member Exclusion Clause. These clauses state that the insurance policy is void if the accident is the fault of an immediate family member to the person claiming injuries. The logic for this exclusionary clause is that there is a higher chance of fraud/collusion when two family members are on both the claimant and the insured side of the claim. So, you could find your 500,000 policy virtually wiped away when the accident is the fault of your child, parent, or spouse. I say “virtually” because the Texas Supreme Court ruled that the exclusion is void to the extent it deprives people of the minimum level of insurance (30,000 per person and 60,000 per accident) required under the Texas Motor Vehicle Safety Responsibility Act. See National County Mut. Fire Ins. Co. v. Johnson, 879 S.W.2d 1 (Tex. 1993).
So if you are only carrying minimum insurance yourself, then the Family Member Exclusion in your policy will not affect you. But if you were responsible enough to buy more than the minimum because you thought you were protecting your own family you will be in for a big surprise.
Surprises When the Person Who Intentionally Caused the Accident Is Not Covered
Traffic can be frustrating, If you drive in and around the Houston, TX area, you have probably observed a case or two of road rage resulting from this frustration. Imagine when it escalates to the point of the other driver intentionally ramming into your car with his car. It happens.
The police come out. He confesses. You call his insurance and tell them confidently, “your client is at fault because he intentionally hit my car. In fact, he admitted it in my presence.”
You will likely receive a surprise letter denying coverage in the mail citing the Intentional Acts Exclusion. Insurance is a contract. The contract is to provide coverage for accident damage that your negligence causes. If you do it intentionally, it is not covered. Insurance companies do not contract to pay for people’s dumb intentional conduct. Keep this in mind before accusing someone of intentionally causing an accident.
Surprises When You Own A Second Car
If you have a standard insurance policy, this policy typically provides you with liability coverage for the vehicle named on the policy plus anyone else’s vehicle that you drive. This is why when you rent-a-car, they can allow you to opt-out of their insurance and use your own. However, when a person owns more than one car, he has only a short time in which to add that vehicle to his current insurance policy or it will be excluded from coverage. Your insurance company has a right to increase the premium when you own multiple vehicles as well as to inquire as to their regular use to determine if others are likely to operate them. If you own a car but do not disclose it to your insurance company, do not expect them to cover it. This can also void the insurance policy of another driver who hits you while driving a vehicle that is owned-but-no-named on the policy.
Steps to Protect Yourself
You cannot protect yourself from all possibilities. The family member exclusion will reduce coverage id a family member is liable. However, the best way to protect yourself from some of the above uncertainties is to go over your insurance coverage with an insurance agent and ask what is and is not covered, maintain good uninsured and underinsured motorist insurance to protect against other driver’s policy exclusion issues, make sure all of the vehicles in the household are on the same policy with sufficient coverage limits, make sure all drivers in the household are on the policy of any vehicle they operate and avoid unsafe driving that could result in road rage.
Paul H. Cannon is a trial attorney and Shareholder at Simmons and Fletcher, P.C. He has been practicing personal injury law since 1995. He is Board Certified in personal injury trial law by the Texas Board of Legal Specialization since 2005.