Car Insurance Companies Filing for Bankruptcy – How Do I Recover?
Brian White | December 21, 2020 | Car Accidents
If another driver is responsible for causing your car accident, you can recover compensation for damages and injuries by filing an insurance claim with the driver’s liability insurance carrier. Texas requires that all drivers carry minimum amounts of liability coverage if they cause a car accident. Liability insurance compensates accident victims for damages caused by an insured driver.
The amount you may receive depends on the facts in your case. The types of damages in a car accident claim may include financial losses, such as medical bills and lost wages. You may also recover compensation for your pain and suffering damages.
However, insurance companies are businesses. They operate to make a profit. Unfortunately, some insurance companies fail.
What happens when an insurance company files bankruptcy? Can an accident victim still recover compensation for injuries and damages?
What Happens When an Insurance Company Files Bankruptcy?
The type of bankruptcy case filed determines what happens to the insurance company. A Chapter 7 bankruptcy case is a liquidation bankruptcy. A bankruptcy trustee sells the company’s assets and uses the money to pay the company’s creditors.
In a Chapter 11 bankruptcy case, the insurance company retains possession of its assets. It proposes a plan of reorganization that outlines how the company intends to handle its debts to continue operating.
In most cases, creditors in a bankruptcy case do not receive full payment of their debts. Creditors must file a proof of claim with the bankruptcy court for their debts to be considered for payment.
Potential creditors may want to consult a bankruptcy attorney immediately to determine whether they need to file a proof of claim. Bankruptcy law is complicated, and failure to file claims or take other action to protect a debt could result in the claim being denied.
However, car accident victims may recover compensation for their personal injury claims by contacting a Texas insurance guaranty association.
What is an Insurance Guaranty Association?
If an insurance company goes out of business or cannot pay its claims, a guaranty association helps pay policy claims. In Texas, automobile insurance policies are handled by The Texas Property and Casualty Insurance Guaranty Association. Most insurance companies that do business in Texas are required to join the association.
It is essential to understand that there are claim limits. An accident victim might not receive compensation for the full value of damages from an insurance guaranty association. Also, some companies are placed in receivership, which means you must file claims with the receiver.
Can I Sue the At-Fault Driver for a Car Accident?
Texas is an at-fault state for car accident claims. You may file a personal injury lawsuit against the at-fault driver to recover compensation for your injuries and damages. However, filing a lawsuit does not guarantee payment of the claim.
If the at-fault driver does not have the assets or income to pay a judgment, you might not receive payment. Therefore, it is important to consider all sources of payment for a car accident claim. A personal injury lawyer investigates all sources of income.
In a case involving a bankruptcy insurance company, the lawyer pursues claims through the bankruptcy court for payment of accident claims. He also investigates whether the insurance guaranty association can pay the claim. If the at-fault driver has sufficient income or assets to pay a claim, the attorney may file a personal injury lawsuit.
The key is to ensure that all sources of compensation are pursued to give you the best chance of recovering money for a car accident claim. Because bankruptcy law and insurance law is complicated, it is best to seek legal advice as soon as possible to protect your best interests and legal rights.
How Much is My Car Accident Claim Worth?
Numerous factors impact the value of a car accident claim. Some factors that determine how much your car accident claim is worth include:
- The type and severity of your injuries. Cases involving catastrophic injuries generally have a higher value
- The amount of insurance coverage available for the claim
- Whether you could be partially at fault for the cause of the car accident
- The strength of the evidence in your case
- Whether you waited too long to seek legal advice and the statute of limitations has expired
- The total of your economic damages and financial losses
- Whether you sustained a permanent impairment or disability because of the accident
Before you can determine the value of a personal injury claim, you must complete medical treatment. It is impossible to know the severity and extent of your injuries and damages until your doctor determines whether you made a complete recovery or you have permanent impairments because of the car crash.