Underinsured / Uninsured Auto Claims In Texas

Residents of Dallas, Fort Worth, Arlington, Grand Praire, Weatherford, or any other town in Texas should be interested in a question posed by an attorney the other day on a web-site, to other attorneys who sub-scribed to the site. It was a question dealing with uninsured and underinsured (UM) automobile coverage.
In the situation, a potential client had come into the attorneys office. The potential new client had been involved in an accident where the other person did not have enough insurance coverage to fully cover the damages this potential new client had suffered. Sounds simple so far. Here was the problem: More than two years had past since the accident had occurred. The question posed was: Can I recover more money from the UM coverage on the injured persons automobile policy.
This was the issue in the case Raul C. Franco et ux., v. Allstate Insurance Company. In the Franco case, Franco sought to recover damages due to the death of their daughter in an automobile accident. The lawsuit had been filed approximately three years after the date of the accident. The applicable statute of limitations for an injury claim was two years.
In the Franco case, the lawsuit had been filed against Allstate Insurance Company because of the accident but the basis for the claim against Allstate was the policy of insurance issued by Allstate. A policy of insurance is a contract between the insurance company and the insured. The statute of limitations on a contract claim is four years.
Allstate argued, among other things, that because the two year statute of limitations had expired on the accident, that the claim against Allstate that originated out of that wreck, was also barred by the two year statute of limitations. The Texas Supreme Court disagreed with Allstate and ruled in favor of the Franco family members stating that the claim against Allstate was a contract claim and thus the four year statute of limitations applied.
What is to be learned here is two-fold. First, a claim for UM benefits under an insureds’ own insurance policy is four years, not two. Second, not discussed in the case but important is the extent of the recovery.
If the other driver had insurance, for instance a liability policy of $20,000, and the injured person had underinsured coverage of $20,000, and a claim whose value was estimated to be $30,000, what would have happened? The answer would be, that because the two year statute had expired for making a claim against the other guys policy and the claim was now only against the injured persons’ underinsured policy, the total recovery would be limited to $10,000. Why? Because the underinsured policy would get a credit for the $20,000 that would have been recovered from the other drivers liability policy.
This can be confusing. It illustrates though, why it is important to get an Experienced Insurance Law Attorney involved early in a case in order to fully compensate a person who is trying to make claims against an insurance company.