Frequently Asked Questions

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Frequently Asked Questions about Personal Injury and Auto Accidents: Liability, Damages, and Coverage

Contents:

What are the issues involved in a personal injury auto accident case?

In a personal-injury auto accident case, three issues are involved: liability, damages, and coverage.

  • Liability: Who is at fault?
  • Damages: How much is anyone entitled to?
  • Coverage: Who is going to pay for it?

What are the types of claims?

In most auto cases, you'll encounter two types of claims: property damage and personal injury. The two types of claims receive separate treatment, as far as damages are concerned, and they can be handled separately. Typically, the plaintiff would handle his or her own property damage claim, because there is not often much dispute about the value of that claim.

What are the liability issues, and what are the types of negligence?

Liability might involve as few as one and as many as three separate issues: negligence, contributory negligence, and last clear chance.

  • Negligence: Was the defendant at fault (in other words, was the defendant negligent)? Negligence is the failure to use reasonable care -- or ordinary care -- under the circumstances. That is what measures negligence on the part of the defendant, the wrongdoer.

    When you introduce something such as drunk driving, that could also escalate the case to another level, introducing something called punitive damages for willful or wanton conduct. If there is a finding of gross negligence, it will trump contributory negligence (see below). It is good to be aware that there might also be additional damages in the form of punitive damages if the conduct of the defendant is so egregious that it rises to that serious a level. However, these damages are something apart from ordinary negligence.
  • Contributory Negligence: Even if the defendant is found to have been negligent, a second issue can arise. Did the plaintiff, by his or her own negligent conduct, proximately cause the damages or injury? Contributory negligence uses the same failure to use reasonable care standard as the first issue. If the plaintiff did anything wrong at all, that was a cause of the accident, even if the plaintiff was only 1% negligent, and the defendant was 99% negligent, the defendant can argue that the plaintiff contributed to his or her own injuries. If the jury finds the plaintiff is contributorially negligent, then the plaintiff will receive nothing at all for damages. North Carolina is one of just a handful of states that still apply this legal doctrine in its purest form.

    For example, let's take an intersection case. The defendant had the red light and drove right through it. Let's say that, in her deposition, the plaintiff says, "I saw my light was green and I just proceeded into the intersection," and she is asked, "Well, did you look after you saw your green light? Did you look both ways to see your way clear?" And she says, "No, I just looked at my green light and I just went into the intersection." The defendant's attorney might argue to the jury that this was negligence. The jury might agree or disagree.

    It is important that claimants understand the contributory negligence rule before they give recorded statements or before they testify at their depositions, so they will appreciate the issues, which are potentially of interest to the insurance adjuster.

    NOTE: Separate rules and issues are applicable to criminal matters, although sometimes the activity in a criminal case can affect a civil case arising out of the same accident.
  • The third issue involves the doctrine of last clear chance. It is a kind of "escape" valve or "saving" provision where the jury is asked, "Did the defendant have the last clear chance to avoid the accident?" If the jury gets to this issue that means it has already found both the plaintiff and the defendant to be negligent. If the jury answers this issue "Yes", then the plaintiff is eligible to be awarded damages despite being contributorially negligent. In that event, the jury can proceed on to damages. Last clear chance is rarely used; it comes up mostly in pedestrian cases.

To What Damages Am I Entitled?

Assuming you win on the liability issues, you then get to the question of damages. Damages for your car and property are frequently handled separately from damages for your personal injuries and can be settled separately as well. Insurance companies frequently settle the property damage claim but do not settle to bodily injury claim at the same time.

Property Damage Issues
The law allows you to recover the fair market value loss to your vehicle and property. This may also, depending on the circumstances, include reasonable repairs, loss of use of your vehicle, a rental vehicle, and accelerated depreciation.

What is Fair Market Value?
The measure of damages in a property damage case often involves the difference between the fair market value of a vehicle before the accident and the fair market value of the vehicle after the accident. Fair market value can be seen as the amount that a buyer that doesn't need to buy a vehicle would pay to a seller that doesn't need to sell. That is, what is the market value to arms length buyers and sellers?

If a vehicle is a total loss, this is what you recover, and not replacement value or what you owe on the payments on the vehicle or any of the other things that might seem important at the time. This can sometimes lead to harsh results, when a vehicle is worth less than the remaining loan payments. If the vehicle is not a total loss, the cost of repairs is important but not the entire measure of damages. Cost of repairs is some evidence of the difference in value between before and after the collision, but it is not absolutely determinative. The true difference in value may also need to consider accelerated depreciation.

Damages for Repairs and Rental Cars
In the event that the vehicle can be repaired, in ordinary circumstances, the damages involve the cost of repairs, the rental vehicle, and accelerated depreciation. The law allows for reasonable repairs under the circumstances and a reasonable rental for a reasonable amount of time. Reasonable is the operative word through all of this.

In other words, the insurance company should provide you with a reasonably similar rental vehicle for a reasonable amount of time. What is reasonable requires a common sense analysis. If you have a delivery truck, and you need to make your deliveries, they probably ought to provide you with a truck not a two-door Yugo because you need a vehicle that can serve as reasonable substitute. The time you are entitled to the use of a rental vehicle is the amount of time that it would take a reasonable person to repair or replace his or her vehicle. It is assumed that you will be looking while repairs or negotiations are taking place and that you will act reasonably. Of course, if you are seriously injured, that may affect how quickly you can get out to find a replacement vehicle.

Accelerated Depreciation
Here is an illustration of accelerated depreciation. If my neighbor and I go out and get brand-new cars on the same date, and drive them the same amount of time, and keep them in the same condition, they should be worth the same. Let's assume we each bought our cars brand new last year for $30,000 but they now have a have a fair market value of only $25,000, because we have each driven them about 10,000 miles in the last year (this is normal depreciation). Then, I am in a wreck in my car and it is badly damaged and requires $9,000 in repairs. Even if the repairs are done to perfection, my car will no longer be worth as much as my neighbor's previously identical car; it will be worth less, because it has been in a wreck that required extensive repairs, and will be less attractive to the buying public.

The amount less that it is worth compared to other similar cars that have not been in a wreck - is the amount of accelerated depreciation my car has suffered as a result of the wreck. This is accelerated depreciation. How can you determine how much it is?

  1. Get estimates and comparables from books, such as NADA or Kelly Blue Book, which can be found at banks or dealerships, or online at the same sites or others, such as Edmunds.com, Cars.com or the like. You will be trying to approximate private retail sale of a comparable vehicle, something between a private retail dealership sale and a wholesale trade; OR
  2. Go to a dealership or car seller and get a written opinion about what your car is now worth after repairs compared to its worth just before the wreck, and before it was repaired; OR
  3. Go to an appraiser and get a professional appraisal. Usually that costs about $100. This is frequently money well spent because significant repairs, such as several thousands of dollars, will often change the overall value of a car several hundreds or even thousands of dollars. In many cases, a professional appraisal is more respected, more reliable, and worth doing.

Insurance for Property Damage
Hopefully, a person whose vehicle is damaged by the negligence of another driver will have recourse to property damage coverage through the other driver's liability insurance policy. If the other driver was insured, North Carolina requires property damage coverage for property damage to a third-party. Thus, if the other driver was negligent and has insurance, then you should be negotiating with the other driver's insurance company to have them pay for the property damage as outlined in this discussion. They may agree or disagree on a particular number for a settlement on the property damage. If you do reach an agreement as to the property damage claim, then that can be settled with a Release that does not release or otherwise affect any other claims that you might have, including claims for personal injuries. However, you need to make sure that the release document that you might sign for the property damage claim is not an all-encompassing general release that purports to also release bodily injury claims from the same accident.

Many times, there is no insurance for the negligent driver (in which case you will need to address this with an uninsured motorist claim - see the discussion about this below) or there may be a disagreement with the insurer for the negligent driver, so that that settlement cannot be readily achieved. In that instance, if you have purchased collision coverage for your own vehicle, you can make a claim for your collision coverage to repair the vehicle.

This may be your only choice, depending on the circumstances presented by a lack of coverage or a recalcitrant insurer for the other driver. If you are having your car fixed through your own collision coverage, it is quite likely it will be subject to a deductible, and the elements of damage are not as readily paid by the insurer in a negotiation. On the other hand, collision coverage creates a contractual duty to pay regardless of who is at fault. Sometimes a collision insurer will pay the property damage claim and then on its own pursue a claim against the insurer for the negligent driver to recoup what is has paid you for damage to your car.

Damages for Personal Injury
To what personal injury damages might I be entitled? There are five elements of damages for personal injuries. North Carolina law recognizes damages for medical expenses, lost wages or earnings, loss of use of part of your body, pain and suffering, and permanent injury.

Medical expenses: These are the reasonable expenses you incur for doctors or hospital treatment or other health care expenses a doctor will say were reasonably necessary as a result of the collision.

Lost wages or earnings: These are the amounts you lose because your injuries prevent you from working. You will usually have lost wages if you are an hourly earner or have lost earnings if you are self employed or are compensated on some other basis than hourly. Your tax returns often will be required to corroborate your hourly rate or earnings history. You are not precluded from receiving lost wages or earnings even if you receive sick pay or short-term disability benefits because North Carolina recognizes the "collateral source rule."

Loss of use of part of your body: The temporary or total loss of use of all or part of your body is a recognized element of damage. For example, if you cannot walk because of broken legs, you may be entitled to a temporary total loss of use of your legs during their healing. If you permanently lose the use of one of your legs, for example, or require it to be amputated as a result of the accident, the law recognizes the permanent loss of use of part of your body. The law also takes into consideration a permanent but partial loss of use of part of the body, such as when a doctor says you will have a 5% permanent impairment to your leg as result of the wreck.

Physical pain and mental suffering: The law provides that a person is entitled to compensation for the physical pain and mental suffering they incur as a result of their injuries. This also may be a permanent item of damages. Valuing pain and suffering is very case and fact specific.

Permanent injury: Arguably, the most important element of damages is permanent injury. If a doctor says that a person's injuries are permanent, it may give rise to damages for the remainder of that person's life. That is the injured person may recover one lump sum for all medical expenses they will need for the remainder of his or her life, which is determined by a schedule set by the Legislature. The same is true for the other elements of damages such as future lost earnings, future pain and suffering, and future loss of use. Having your injury deemed permanent requires the expert opinion of a doctor. This may not happen until you have been treated or followed for quite some time, depending on the doctor and the injury. It is determined after you have reached maximum medical improvement. .

What do I need to know about insurance coverage?

Insurance coverage is an extremely important component of virtually any claim for injury or damage regardless of the cause of the accident. There are a number of different types of insurance coverage and they may interact on a particular claim in a number of different ways. Often, the central issue in a case involving an accident is not the accident or fault for the accident, but an insurance issue embedded in that dispute. Below is a list of some types of insurance, and a brief overview of how they impact on a particular claim.

Medical Payments Coverage
Medical payments coverage is found in many liability policies, including personal and business automobile insurance policies, as well as homeowners' policies and policies insuring premises liability. Medical payments coverage typically does not require a showing of fault on a particular person in order to trigger benefits. Rather, within certain prescribed limits, (and usually with a relatively low cap in coverage) the insurer agrees to pay all reasonably related medical expenses to an injury that occurs in a particular place (for example, in a car that is insured through an auto policy, or at a store that is insured through a business liability policy).

The obligation to pay medical payments coverage is strictly driven by the policy language in the policy in question. An important point about this type of coverage is that it can be paid without releasing or affecting any other potential claims or types of coverage, and it should be paid promptly, even in an ongoing fashion as the medical expenses are periodically incurred and submitted to the insurance company.

An insurance company should pay this obligation with little fight or delay, so long as the medical expenses are reasonably related to the accident, and the accident occurred in a place and circumstance that triggered the coverage. Generally, insurance companies do not provide for a setoff against these benefits if there is also health insurance involved for the same claim, so there can be something of a double recovery in that instance.

Health Insurance
Health insurance is provided through a personal or group policy, often associated with employment of a family member who is on a health insurance plan. This insurance, subject to the provisions of the particular policy or plan, may provide defined benefits for payment to healthcare providers for injuries relating to an accident. Some of these healthcare plans have exclusions against benefits for certain activities, such as the commission of a felony, or other highly risky activity.

Health insurers who pay benefits often want to be paid back out of the proceeds of a recovery against the person or corporation that negligently caused the accident or injury. This is what is known as a subrogation provision. The ability to enforce this right is a complicated legal issue, but often involves an analysis of whether the health insurance was purchased through an employer in a self-funded plan subject to federal ERISA laws, or whether the policy is personally purchased independent of one's employment, or in an exempt area.

Often, in the negotiation of a settlement with someone who has negligently caused an injury or accident, there is a companion negotiation with the health insurer as to how much money should be paid back to that entity for medical expenses it has paid through its insurance obligations. This can often be a very important part of a settlement. How much one has to pay back to a health insurer may affect how much one is willing to accept from a negligent driver's insurance company, since the two issues are inter-twined.

Liability Insurance
Liability insurance is designed to provide a source of funds to protect somebody who has acted negligently and has as a result injured or damaged someone else. The person protected by liability insurance can be an individual, a partnership, a corporation or any other legal entity. Typical types of liability insurance include: automobile insurance, commercial liability insurance, homeowners' insurance, professional liability insurance, and umbrella or excess policies above primary coverage affording the same. Liability insurance can be purchased for just about anything these days, although sometimes the risk is novel or highly risky and a non-standard insurer is called upon to write the risk.

Automobile insurance is heavily regulated by the State of North Carolina a minimum limits of liability coverage are mandated in a policy issued in this State for $30,000.00 per person with an aggregate cap of $60,000.00 per accident. This is the minimum limit that an insurer can write on an automobile in this State. Many people voluntarily buy limits well in excess of this amount. A much higher amount of minimum coverage may be required under State of Federal law for bigger heavier vehicles (such as tractor trailers) or for vehicles involved in certain types of interstate commerce.

Homeowners' and business owners' policies insuring injuries at premises and other negligent activity by homeowners and business owners generally have limits of at least $100,000.00 per accident. These policies generally try to exclude coverage for the ownership, maintenance or use of automobiles, but do afford a wide variety of coverages for other circumstances whereby someone may be injured or damaged.

Most professionals have professional liability coverage. For example, doctors, architects, and engineers all frequently purchase such coverage. An interesting aspect of this coverage is that the policy that is triggered by this coverage generally is the one in effect when the claim is made, rather than the one in effect when the accident occurs.

Self Insurance and Deductibles
Some insureds rely on so-called "self-insured" products and many insureds use high deductibles or "self-insured retentions" to maintain a significant percentage of the risk on their own, before the insurance coverage is triggered. This can become very important in circumstances involving claims against governmental entities, due to provisions relating to immunity for certain claims that are not insured through a liability insurance policy.

Uninsured and Underinsured Motorist Coverage
Many times, in situations involving automobile accidents, the negligent driver and/or the negligent owner of an automobile that's involved in an accident will not have any liability coverage, despite a law requiring the same, or they may have only low limits of coverage, which are not close to enough to satisfy a claim for damages or injuries. The minimum limit mandated by the Financial Responsibility Act is $30,000.00 per person and with a $60,000.00 per accident cap for a bodily injury claim. Even if a negligent driver or owner has limits in excess of this, for example $50,000.00 per person and $100,000.00 per accident, or $100,000.00 per person and $300,000.00 per accident, those limits may not be enough to satisfy the damages and injuries that were caused by the negligent acts and omissions. In that instance, insurers have an insurance product which many insureds purchase described as uninsured and/or underinsured motorist coverage.

Policies written in excess of the minimum financial responsibility limits should have such coverage unless it has been specifically rejected by the insured. This coverage is purchased not by the negligent tort-feasor, but by the persons or companies interested in protecting themselves when someone else is negligent. It provides coverage above and beyond that afforded through the negligent driver/owners' policy. It acts as something of a safety net. Thus, for example, if a negligent driver/owner only has $30,000.00 available for an injured person who is occupying a second automobile in the accident, whose driver was not negligent, that injured occupant of the second vehicle may have recourse to underinsured motorist coverage. It could be coverage insuring that vehicle, that family member, or in other ways provide protection for that person through a policy unrelated to that insuring the negligent driver of the first vehicle.

Uninsured motorist coverage insures against negligent drivers who have no coverage (or coverage below $30,000.00 per person), while underinsured motorist coverage insures persons injured by a negligent driver/owner who has liability insurance coverage, but not enough to make the injured person whole. This is very important coverage and often saves the day when the negligent driver has not purchased adequate insurance, or is a phantom hit and run driver.

The interaction between the uninsured and/or underinsured motorist coverage and the settlement of a claim is quite tricky. One cannot simply accept the negligent driver's payout of limits of coverage and then thereafter turn to the underinsured motorist insurer for additional benefits, as there is a complicated statutory procedure for putting the underinsured motorist insurer on notice of and giving it the opportunity to participate in the entire claims process, including activities and deadlines relating to the settlement with the underlying insurer for the negligent driver.

One must proceed with extreme caution in this aspect of a claim. An additional interesting provision in North Carolina is that for claims involving uninsured and/or underinsured motorist coverage there is an arbitration provision, which can often be used to avoid the lengthy time and cost associated with a traditional jury trial as a means of resolving a claim. One again, this procedure is somewhat complex, but in the end the savings in time and expense can be helpful.

Statutes of Limitation
Statutes of limitation are outside limits when a suit must be filed to preserve one's rights. The North Carolina Courts have repeatedly upheld these rigid deadlines for filing lawsuits, and one can lose an otherwise valuable legal right by waiting too long to assert a claim. Different types of claims have different statutes of limitation. One should ascertain as soon as possible what the likely statute of limitation would be for a particular type of claim (there are a number of different statutes for different complained-of activities and injuries) so that the deadline does not pass.

Smyth & Cioffi, LLP