Legal Question in Personal Injury in Texas

Re: Liability vs UI/UIM Claim Settlement

It is possible to settle a liability claim against the negligent third party and at the same time preserve your right to pursue a claim under your UIM coverage IF BUT ONLY IF settling the claim against the negligent third party does not prejudice your auto insurance carrier's rights.

Any time you make a claim under the UI/UIM provisions of your policy, your insurance carrier has the right to pursue the negligent third party to recoup all monies paid to you---in other words, the carrier is subrogated to your rights to pursue the negligent third party to the extent the carrier makes payment to you. If you do anything to prejudice the carrier's subrogation rights, then you would forfeit your right to recover under the UI/UIM provisions of your policy. Of course, this assumes that the negligent third party has assets that can be pursued over and above the liability coverage on his or her vehicle. If he or she has no assets, then giving a release to the negligent third party will not prejudice your insurance carrier's rights and, therefore, you can settle with the negligent third party's insurance carrier and then pursue a claim under your own auto policy.

You need to send a letter to your auto insurance carrier requesting their consent to settle with the third party. Your auto carrier will typically check the financial responsibility of the negligent third party and then decide whether or not to give you consent to settle with the negligent third party's carrier. If your auto insurance carrier gives you consent to settle, make sure you have this consent in writing.

If your carrier refuses to give you consent to settle, this may be an indication that the negligent third party has assets that can be pursued over and above the liability policy on his or her vehicle. One would think that your carrier would share whatever information they retrieve with you so that you can decide whether or not to demand payment from the negligent third party of an amount in excess of the liability coverage.