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Hurt In A Car Accident By A Bankrupt Driver? You May Still Recover Compensation For Your Personal Injuries.

insurance-1991216_1280-300x211Another driver crashed into you. You suffered personal injuries in the car accident. Now, you need medical care. Medical Bills. Lost Wages. Disability. Pain and Suffering. You may be worried about several issues. So, you decide to make a claim.

After making a claim, you learn more bad news. The driver who caused the crash is bankrupt. You learn the other driver has actually filed a Chapter 7 bankruptcy seeking to discharge all of his or her debts. Can you still recover compensation for your personal injuries? In most cases, the answer is yes.

At our office, we have helped many injured accident victims recover compensation even when the driver who caused the crash is bankrupt. These issues can require legal guidance. An experienced personal injury attorney willing to fight for his or her clients can help. But, be careful who you hire. Many billboard and television advertising attorneys talk a big game but are unwilling (or unable due to a lack of real courtroom expertise) to do the real legal work needed.

Why am I pondering the issue of bankrupt defendants in personal injury cases? Although I’ve dealt with this issue many times, I don’t currently have a client facing the issue. But, I do read all the cases decided by the Alabama Supreme Court. And, our Supreme Court just rejected an insurance company’s attempt to use a driver’s bankruptcy to avoid paying policy proceeds to a car accident victim. Thankfully, in the recent case of Easterling v. Progressive Specialty Insurance Company, our Supreme Court did not allow that insurance company to avoid its responsibility.

So, how can you still recover compensation for your injuries if the at-fault defendant driver is bankrupt? You still have two avenues for recovery:

  1. If the negligent driver (who is now bankrupt) had liability insurance, you can still recover it.
  2. If you have Uninsured / Underinsured coverage (commonly called UIM), you can still recover it.

The now bankrupt driver who caused your injuries may have liability insurance. Alabama law requires every driver to carry liability insurance. Of course, our law only requires drivers to carry small amounts of coverage that may not be sufficient for your damages. And, some drivers ignore this law. Alabama has long had a problem with uninsured drivers using our roadways. I’ve written some past posts on the problem of uninsured drivers in Alabama. Fortunately, the rate of uninsured drivers in our State is decreasing.

If the other driver carries required liability coverage, it is available for your injuries. A bankruptcy raises legal hurdles. If your case has been filed in court, your lawyer may need to file the proper motions with the bankruptcy court for permission to pursue the at-fault driver’s available insurance coverage. An experienced lawyer should know how to handle that situation.

What if the at-fault driver had insurance but the coverage was too little for your damages? What now? If you have UIM coverage, you can make a claim against that policy. Your policy probably contains UIM coverage. Alabama law generally requires insurance companies to provide this coverage unless you specifically reject it. You should never reject UIM coverage. Because so many other drivers have no liability insurance or too little liability insurance, you really should make sure your policy contains a significant amount of UIM. Generally, your UIM coverage pays proceeds for damages you are legally entitled to recover from the at-fault driver but could not recover because he or she was either uninsured or had too little insurance.

This brings us to the scenario in the recent Easterling v. Progressive case I mentioned earlier in the post. In that case, the UIM insurer Progressive refused to pay its own insured his UIM benefits. Why? Progressive argued that its insured was not legally entitled to recover compensation from the at-fault driver due to that driver’s bankruptcy. Fortunately, our Court rejected this argument. While a bankruptcy petition is meant to help the debtor, it is not meant to be used by third parties like Progressive in an effort to avoid their liability. This decision by the Alabama Supreme Court is a positive step in protecting the rights of personal injury victims to seek compensation for their damages. And, it is a positive step in holding insurance companies accountable for the coverage they promise to provide their policyholders.

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At the Blackwell Law Firm, we help car accident victims recover for their injuries and damages. We take our job seriously. We believe lawyers should constantly study their chosen specialty. Some car accident claims are straightforward. However, others present substantial legal issues. Many of the television and billboard lawyers advertising for cases across Alabama can quickly ruin a good case because they lack the expertise or desire to fight for their clients in a real courtroom. Call us if you have questions. Consultations are always free and confidential.