Want to save on your auto insurance – Some things you should know about Personal Injury Protection and Underinsured Motorists Coverage

More and more it seems that the cost of automobile insurance in Texas is skyrocketing and a lot of people are looking for ways to save on their automobile insurance premiums, particularly in the current economy. Most people don’t know that when they purchase an auto policy, the insurance company may be required by law to include uninsured motorists and personal injury protection or PIP coverage in their policy. By rejecting these types of coverage you may be able to save substantially on your premiums. But before you do so, here are some things that you might want to consider.

Uninsured motorist coverage will pay for injuries and/or damages that are caused by an automobile accident when the driver responsible for causing the accident does not have any insurance or does not have enough insurance to pay for all your damages caused by the accident. Uninsured motorist coverage also provides coverage for you if you have been involved in a hit and run accident. You, your family members, your passengers, and anyone driving your car with your permission is covered by your uninsured motorist coverage.

Personal injury protection coverage is a type of no-fault insurance. In Texas, insurance agents are required to offer you a minimum $2,500 in coverage. Personal injury protection provides coverage to you without regard to who is at fault. Personal injury protection is similar to medical payments coverage, but it provides a few more benefits. Personal injury protection gives you medical coverage, in addition, it will pay 80% of the income you would have received but for your injuries. Personal injury protection also covers care-giving expenses, so you can hire someone to take care of you while you are recovering from your injuries. However, Personal injury protection does not cover expenses related to the repair of your vehicle. Personal injury protection covers you and your passengers and can be used in conjunction with other medical coverage you may have.

If you decide that you want to reject uninsured motorists and/or personal injury protection coverage, you should be aware of Sections 1952.101 and 1952.152 of the Texas Insurance Code. These Code sections provide that an insurer may not issue an automobile liability insurance policy that covers liability arising out of the ownership, maintenance, or use of any motor vehicle unless the insurer provides uninsured motorist coverage and personal injury protection coverage in the policy or a supplemental to the policy. However, neither uninsured motorist coverage or personal injury protection coverage will be required if any insured named in the insurance policy rejects either or both types of coverage in writing. If the named insured has rejected either or both types of coverage in connection with the issuance of the initial insurance policy or in an insurance policy previously issued to the insured by the same insurer or by an affiliated insurer, the insurer is not required to provide that coverage in or supplemental to a reinstated insurance policy or renewal insurance policy, unless the named insured requests, in writing, uninsured motorists coverage and/or personal injury protection coverage be included in the reinstated or renewal policy.

So who can reject uninsured motorist or personal injury protection coverage? The insured named in the policy of coarse! Well that person may not be who you would think it would be. This issue was addressed by the Texas Supreme Court in Old American County Mutual Fire Insurance Company v. Zefereno Sanchez..

In the Sanchez case, Margarita Sanchez, the wife of Zeferino Sanchez, applied for and purchased an insurance policy from Old American covering two of the couple’s vehicles. Ms. Sanchez rejected uninsured motorists and personal injury protection coverages in the insurance application, and Old American never assessed premiums for these coverages. In applying for the policy, Ms. Sanchez affirmed that the rejections of uninsured motorists and personal injury protection coverages would apply to the current policy and to all future renewals of that policy. When the Sanchezes renewed their existing policy the following year, neither Mr. nor Ms. Sanchez requested personal injury protection or uninsured motorists coverages at that time. Although Ms. Sanchez’s name appeared on the original policy application, she was not listed as a named insured on the declarations page of the policy. The policy, however, defined “you” and “your” (i.e., the insureds under the policy) to include the “named insured” as well as “the spouse of the named insured, if a resident of the same household.” Ms. Sanchez fell within the policy definitions of “you” and “your” because she and Mr. Sanchez lived in the same house at all pertinent times. To that end, the parties stipulated that both Mr. and Ms. Sanchez were insured under the policy.

After an automobile accident, Mr. Sanchez filed a claim with Old American for uninsured motorists and personal injury protection benefits under the policy. Old American rejected the claim and filed suit seeking a declaratory judgment absolving it of any obligation to pay those benefits. The Texas Supreme Court agreed with Old American by holding that the phrase “insured named in the policy” is synonymous with the term “named insured” in Sec. 1952.101. and Sec. 1952.152. of the Texas insurance Code. In addition, the Supreme Court stated that because Ms. Sanchez can be classified as a “named insured” and thus an “insured named in the policy” we hold that she had statutory authority to reject uninsured motorists and personal injury protection coverages in the policy.

Therefore, just because someone who resides in your household is not specifically named in your auto policy that will not preclude him or her from being authorized to reject uninsured motorists and personal injury protection coverages on your behalf. At The Law Office of Stephen O’Rear, P.C. we help people who have a coverage disputes with insurance companies.