Mr. Haynes Explains: Why Your Tennessee Personal Injury Case Is Often Limited by Insurance Coverage

One of the hardest conversations I have with new personal injury clients has nothing to do with who caused the accident.

It has to do with insurance.

Most people assume that if someone else’s negligence caused their injuries, the insurance company will simply pay whatever their case is worth.

I wish it worked that way.

The reality is that one of the biggest factors affecting the value of a personal injury case isn’t necessarily how badly you were hurt—it’s how much insurance coverage is available.

That may not seem fair, but it is the reality of personal injury law.

You Can’t Collect Money That Doesn’t Exist

Let’s say someone runs a stop sign and causes a serious collision.

You suffer permanent injuries.

You need surgery.

You miss months of work.

Your future medical expenses are substantial.

Your case may legitimately be worth hundreds of thousands of dollars.

But what if the driver who hit you only purchased a $50,000 liability insurance policy and has no meaningful assets?

Even if a jury awards far more than $50,000, collecting that money is another matter. A judgment is only as valuable as the person’s ability to pay it, and many people simply don’t have significant assets beyond their insurance coverage.

That’s why one of the first things an experienced personal injury lawyer wants to know is:

How much insurance is available?

Tennessee’s Minimum Insurance Limits Are Too Low

As of today, Tennessee only requires drivers to carry $25,000 in bodily injury liability coverage per injured person.

In my practice, the vast majority of policies I see are either $25,000 or $50,000, with $50,000 probably being the most common.

That might be enough for a relatively minor injury.

It is nowhere close to enough when someone suffers permanent injuries, requires surgery, loses the ability to work, or faces years of future medical treatment.

Medical costs have skyrocketed over the years.

Unfortunately, Tennessee’s minimum insurance requirements have not kept pace.

Personally, I believe Tennessee should seriously consider increasing the minimum required liability coverage to $50,000. It wouldn’t solve every problem, but it would provide much better protection for innocent people who suffer serious injuries.

Why Uninsured and Underinsured Motorist Coverage Matters

One of the most valuable coverages you can have is uninsured/underinsured motorist coverage, often called UM coverage.

Many people think UM coverage only applies when the other driver has no insurance at all.

That’s only half the story.

It also protects you when the other driver’s insurance simply isn’t enough to fully compensate you for your injuries.

Here’s a simple example.

Suppose the driver who caused the accident has a $50,000 liability policy.

Your damages total $200,000.

If you purchased $250,000 in uninsured/underinsured motorist coverage on your own policy, your own insurance may provide additional coverage, subject to Tennessee law and the terms of your policy.

Many people don’t realize that one of the most important insurance policies in a serious injury case may actually be their own.

That’s why I always investigate every possible source of insurance coverage—not just the at-fault driver’s policy.

Can the Insurance Company Refuse to Tell You the Policy Limits?

Another thing that surprises many clients is that the insurance company generally is not required to tell you how much liability insurance their insured purchased.

Why?

The theory is that if lawyers immediately knew the policy limits in every case, they would simply demand those limits without first investigating the claim and evaluating the damages.

As a result, determining how much insurance is available is often one of the first challenges in a serious injury case.

Sometimes we can piece together clues.

For example, if you have uninsured/underinsured motorist coverage through your own insurance company and that company elects to “opt out” of the lawsuit under Tennessee law, we often know that your uninsured motorist limits are less than or equal to the liability coverage available from the at-fault driver. While that doesn’t tell us the exact amount of the liability policy, it can give us valuable information as we evaluate the case.

Insurance Isn’t the End of the Story

Even after a settlement is reached, clients are often surprised to learn they may not receive the entire settlement check.

Why?

Because there may be medical bills that still have to be addressed.

What Is Subrogation?

One legal term clients hear early in their case is subrogation.

Don’t worry about the word itself.

In plain English, it simply means that if someone else paid your accident-related medical bills, they may have the right to be paid back from your settlement.

I explain this to every client at the beginning of the case.

Months later—or sometimes even years later, when the case finally settles—most people have understandably forgotten about it.

Here’s an example.

Suppose your health insurance paid $25,000 of your hospital bills after the accident.

If your case later settles, your health insurance company may ask to be reimbursed from the settlement because it already paid those medical expenses.

The same can be true for Medicare, TennCare, the Veterans Administration, and certain other entities that pay accident-related medical bills.

That doesn’t mean your settlement disappears.

It simply means that part of the settlement may have to be used to repay those expenses.

The good news is that these reimbursement claims are often negotiable.

One of the most valuable services a personal injury attorney provides is negotiating those claims down whenever possible. Every dollar we save is another dollar that stays in our client’s pocket.

Not Every Medical Bill Has to Be Paid Out of the Settlement

Recently, I’ve noticed another trend.

Some health insurance companies are refusing to pay accident-related medical bills when they know another driver may have been at fault.

That creates a different situation.

If your health insurance never paid the medical bill, there usually isn’t a reimbursement claim because the insurance company never paid anything in the first place.

Hospitals also have the ability, in certain circumstances, to file a hospital lien against a personal injury settlement.

A hospital lien is different from an ordinary medical bill. If properly filed, it gives the hospital certain legal rights against your recovery.

But not every hospital files one.

If the hospital does not properly file a hospital lien, the unpaid bill is often simply an unsecured debt.

That can give your lawyer much more negotiating leverage.

Unlike a valid hospital lien, unsecured medical debt generally does not have to be paid directly out of your settlement.

Now, that does not mean you should ignore the bill.

The hospital or collection agency can still try to collect the debt and may even file a lawsuit against you.

For that reason, most clients prefer to resolve those bills.

The difference is that unsecured medical debt is often much easier to negotiate. Providers and collection agencies frequently accept substantially less than the full amount owed rather than risk collecting nothing at all.

Successfully negotiating those debts can make a significant difference in the amount of money the client ultimately takes home.

Your Net Recovery Matters More Than the Settlement Number

When people ask, “What is my case worth?” they’re usually thinking about the total settlement.

A better question is:

“How much of that settlement will I actually keep?”

That depends on many factors, including:

• The amount of insurance coverage available;
• Attorney’s fees;
• Case expenses;
• Medical liens;
• Health insurance reimbursement claims;
• Outstanding medical bills; and
• How successfully those claims can be negotiated.

Two lawyers might obtain the exact same settlement amount.

The lawyer who does the better job negotiating medical bills and reimbursement claims may leave the client with thousands of dollars more in their pocket.

The Bottom Line

The value of a personal injury case isn’t determined solely by how badly someone was hurt.

Insurance coverage often sets the practical limits of what can realistically be recovered.

That’s why one of the first things I investigate in every serious injury case is not just who caused the accident, but what insurance coverage is available and whether there are additional policies that may apply.

Just as important is what happens after the settlement.

Identifying every available source of insurance, negotiating medical liens, reducing reimbursement claims, and resolving outstanding medical bills can have a tremendous impact on what the client actually takes home.

A good personal injury lawyer isn’t simply trying to obtain the largest settlement possible.

They’re working to maximize the client’s net recovery—because at the end of the day, that’s the number that really matters.

Trusted Counsel. Proven Results.
Mr. Haynes Explains