Personal Injury Protection (PIP) And Liability Coverage In Texas Automobile Insurance Policies

Policyholders in Grand Prairie, Arlington, Mansfield, Fort Worth, Weatherford, Aledo, Azle, or any other city in Texas who have one of the coverages listed above would want to know how those coverages work if they are in a situation where the coverages may apply. A case decided by the Texas Supreme Court in 1999, gives some insight into how these types of claims are handled.
The court actually decided two cases together. They are Mid-Century Insurance Company of Texas v. Jack Kidd, and the other is Nationwide Mutual Insurance Company v. Catherine Gerlich.
The issue in both cases revolved around how PIP benefits were paid when a claim was being made against the liability portion of the same policy.
To begin with, in order to make sure that a policyholder is being treated properly, they should consult with an experienced Insurance Law Attorney. Putting that aside, and rather than getting into the specifics of each case, lets assume the following scenario:
A policyholder has PIP coverage of $2,500 and liability coverage of $20,000. The policyholder is involved in an accident wherein he has injuries and resulting medical bills and lost wages that exceed the limits of both coverges.
The question before the court was whether or not Mid-Century Insurance Company of Texas (Mid-Century) and Nationwide Mutual Insurance Company (Nationwide) only had to pay the policy limit on the larger coverage or pay the limits on both coverages. Mid-Century and Nationwide argued that they only had to pay one limit.
Without gettting into the logic of their decision, which is a good read for understanding how it works, the court’s ruling was essentially this:
1) PIP is payable up to its limits;
2) the liability portion of the policy gets an offset for the monies paid under the PIP portion of the policy; and 3) where the PIP limits and the liability limits are less than the total damages, the limits of both are payable.
Using the courts ruling the policyholder would be able to recover a total of $22,500 per the above scenario.
In a second scenario assume the limits are the same but the total damages are only $14,000. In this second scenario, the injured person would be entitled to the $2,500 in PIP but only $11,500 in liability because the liability portion of the policy gets an offset for the benefits paid by the PIP portion of the policy.
The Texas Insurance Code Section 1952.159 helps explain the above to a certain degree. It says;
If a liability claim is made by a guest or passenger described by Section 1952.151 against the owner or operator of the motor vehicle in which the guest or passenger was riding or against the owner’s or operatior’s liability insurer, the owner or operator of the motor vehicle or the owner’s or operator’s liability insurer is entitled to an offset, credit, or deduction against any award made to the guest or passenger in an amount equal to the amounts paid by the owner, the operator, or the owner’s or operator’s automobile liability insurer to the guest passenger under personal injury protection.
This law was enacted in 2005 in response to the Supreme Court’s Mid-Century decision.
How this works is not really all that confusing to an attorney familiar with it, but can be very confusing the first time it is encountered.