By Texas Watch, February 1, 2011

Farmers Insurance has parked a huge bus outside the State Capitol today.  If the size of the bus is any indication of the out-sized influence of the insurance industry, then homeowners are in deep trouble this session.  Plus, Farmers Insurance has opted to replace the Texas flag with its own banner.  Does this indicate the full takeover of the state by the insurance industry that we’ve all long feared?

But, seriously… Instead of preparing to handle claims for its customers by heading to North Texas where they are experiencing widespread power outages and are anticipating significant weather-related insurance losses, Farmers has opted to use its “mobile claims center” as a prop to lobby legislators.

In a state where homeowners are already paying the highest rates in the nation, Farmers – the state’s third largest home insurance carrier – has announced a rate hike set to take effect next month.  Shouldn’t Farmers be using its resources to help its customers instead of lobbying lawmakers for even more insurance industry protections?

Then again, maybe it is just too much to ask a big insurance company to put its customers first.

In my blog yesterday I said that insurance companies will try to take advantage of you any way they can. Today I would like to talk about diminution in value claims and how insurance companies take advantage of the uninformed driver.

I have a friend who was in an auto accident several years ago and sustained significant damage to his vehicle. He was not at-fault and the other driver’s insurance company paid to have his vehicle repaired. He was satisfied with the repairs and went along with his life. When we were talking about his wreck the other day, I asked him if the at-fault party’s insurance company paid him for his vehicle’s diminution in value and he said “no, what is that”.

Diminution in value is the difference in value your vehicle is worth after it has sustained physical damage. For instance, if you went to the dealership and there were two identical vehicles, same year, model, mileage, etc… but one of the vehicles had been in an accident; a reasonable person would chose the vehicle that had no prior history of damage. Well, the difference in the value between those two cars is what we call diminution in value. After I explained this to my friend he became very upset that the insurance company did not offer to pay for this and I told him that this happens all the time.

Aside from this example there are other factors that can cause repaired cars to lose value:

• Use of parts produced by someone other than the original manufacturer of the car
• Poor repair job
• Not being pre-owned certified
• Not being eligible for factory transferable warranty on damaged vehicles
• An increase in disclosure and title obligations

There are three categories of diminished value that damaged or repaired cars can fall into: insurance related diminished value, shop related diminished value, and inherent diminished value.

If you have been in an accident and your vehicle has sustained property damage, make sure you make a separate claim for diminution in value. Insurance companies will not tell you about this type of claim nor do they like paying for it. Most insurance companies will require you to have your own estimate done and then submit it to them for evaluation.

The state of Texas requires all drivers to carry liability auto insurance, but what is liability auto insurance, how much should I carry, and does the amount differ based on the type of vehicle I am driving?

Liability auto insurance covers the damages that you have caused to another vehicle or person in an accident. It does not cover any of the damages that you or your car incurred. If you are still making payments on your vehicle, you are required to carry collision coverage as well. The level of liability auto insurance drivers are required to carry is different in each state. The minimum amount that a driver in Texas needs to carry is 25/50/25. In other words, $25,000 for each injured person, $50,000 total per accident, $25,000 for property damages. These limits will increase on January 1, 2011 to 30/60/25. If the damages from the accident exceed these limits you will be held liable for the excess expenses.

There are liability coverage limits that commercial trucks are required to carry based on how much they weigh and what they carry.

• If a truck weighs under 10,000 lbs the minimum limit is $300,000.
• If a truck weighs 10,001+ lbs, carries non-hazardous property, the limit is $750,000
• If a truck weighs 10,001+ lbs, carries hazardous property carried in a portable tank with a capacity exceeding 3,500 water gallons, the limit is $5,000,000
• If a truck weighs 10,001+lbs, carries oil/hazardous waste. The limit is $1,000,000
• If a truck weighs under 10,001 lbs, carries explosives/poison gas/radioactive material, the limit is $5,000,000
• If a vehicle can seat 16+ passengers the limit is $500,000
• If a vehicle seats 15 or fewer passengers the limit is $1,500,000

Although these limits seem high, they typically are not sufficient enough to take care of most expenses in a tragedy. Knowing this, it is a good idea to carry more coverage than required no matter what vehicle you drive. Your first time will result in a fine ranging from $175 to $350, and any other violations could cost you up to $1,000. A common violation is failing to show proof of insurance when requested.

I recently had a client come into my office who had been in a serious car accident.  He sustained significant injuries from the crash and had already accumulated very high medical bills.  My client was a passenger in a car driven by a friend.  Their vehicle was struck from the side by a large truck that was attempting to change lanes.  The impact of the collision sent my client’s car into the guardrail and was also struck by the vehicle following them.

The police report cited the large truck driver for an unsafe lane change and it also listed as “other contributing factors” the vehicle who struck them from behind for following too closely.  This fact pattern presents a problem that often confronts those who have been in multiple vehicle collisions.

Prior to 1995, Texas followed the traditional “Joint and Several Liability Rule”.  This rule made each and every defendant or at-fault party liable for the entire amount of the plaintiff’s damages regardless of their relative degrees of fault or responsibility.  So in our fact pattern above, my client would have been able to recover his entire damages from either the large truck or the vehicle that hit him from behind.  This was true even if it was determined that the vehicle that hit them from behind was only 20% responsible for my client’s damages; they would still be responsible for 100% of my client’s damages.

In 1995, Texas made a change to what some call “Modified Joint and Several Liability”.  This rule says that a defendant is only responsible for the full amount of the plaintiff’s damages if they are found to be more than 50% responsible for the accident.  Otherwise, they are only responsible for an amount equal to their percentage of fault.

Under modified joint and several liability, my client would only be able to recover his full amount of damages from the truck driver or the vehicle from behind if the jury found them to be more than 50% responsible for the accident.  Because multiple vehicle collisions present many complicated issues, it is a good idea to contact a personal injury lawyer to help you properly set up your claims.