Who do I Sue? The Driver or the Insurance Company? A Discussion about “Direct Actions.”

You just had a car accident.  You make a claim against the other driver’s insurance company.  They do their investigation and lead you to believe that they will take care of your claim.  Instead, the insurance company either fails to pay a fair amount for your claim or they deny your claim altogether.

What if I cannot settle with the insurance company?

You have to file a lawsuit.  But do you file the suit against the other driver or their insurance company?  The answer is simple:  Not only do you sue the other driver, you are NOT permitted to sue their insurance company.

Texas law does not allow you to file suit against the insurance company directly.  You must file the suit against the driver.  This is true even though you have been dealing with the insurance adjuster all along.

Why can’t I sue the insurance company directly?

Texas is not a “direct action” state.  A “direct action” is where an injured person is permitted to file suit directly against the insurance company rather then the individual driver.

But Texas does not allow direct actions.  For instance, if you suffer an injury or damages as a result of a car accident, you must sue the driver.  You cannot sue the insurance company directly even though the insurance company has to pay the judgment entered against their driver.

It’s the Defendant’s Auto Insurance Company that’s Behind the Whole Case.

What jurors don’t know is that, even though they only see the individual plaintiff, defendant, and their attorneys in the courtroom, the insurance company for the defendant is really running the show for the defense.

If you read your own auto insurance policy, you will see that the insurance company maintains “exclusive control” over the handling of the claim. That means that the insurance company has all the rights regarding the case.  Their driver has no rights to manage the case even though they have been sued.

  1. The insurance company retains the defendant’s attorney.
  2. The insurance company pays the defendant’s attorney.
  3. The insurance company deals directly with the defendant’s attorney in the investigation and trial preparation.
  4. The insurance company makes all decisions regarding settlement of the case.
  5. The insurance company is ultimately responsible for paying the judgment.

The individual defendant driver is nothing more than the insurance company’s “front-man.”  To add insult to injury, many times the insurance adjuster in sitting in the courtroom watching the trial!!!

How does this impact my auto accident case?

Before the trial starts, the parties and the attorneys are ordered by the judge not to mention the defendant’s insurance company.  If insurance is mentioned, it may result in a mistrial and maybe even the party being held in contempt of court.

The “theory” behind this rule is that, if the jury learns about the existence of insurance, then they are more likely to award an “unjust” verdict against the defendant because it is the insurance company that will be responsible for paying the judgment rather than the individual defendant.

However, in my years as a Dallas personal injury attorney, it appears that the opposite is true.  When jurors do not know about the existence of insurance, they tend to award an unjustly low verdict.  This is because they have sympathy for the individual defendant.  The jurors do not want to hit a defendant with a significant monetary judgment even though such a verdict would be justified.  The end-result is that an injured person gets an unexpectedly low verdict and the insurance company pays less to compensate the injured victim.

 Jurors are Being Defrauded in Auto Accident Cases.

Jurors in Texas are basically duped into thinking that the individual defendant is on the line for the judgment.  When they never hear about insurance during the trial, they assume that the defendant did not have insurance.

By not allowing direct actions, Texas law is basically implying that jurors are unable to be fair if they learn about the existence of insurance.  This is an insult to intelligence of those people we ask to perform their civic duty to serve as jurors.

The laws needs to stop thinking that jurors are ignorant and unable to render a fair verdict.  Jurors deserve to know the truth about who the real players are in the cases they are deciding.  And those who suffer injuries as a result of careless drivers deserve a fair shake when a jury is asked to render justice.

How can this situation be fixed?

Let’s stop the charade.  In Texas, insurance companies have been very successful in shaping the political and legal landscape in order to insulate themselves from the litigation process.

It is time for Texas lawmakers to pass legislation allowing direct actions just like the numerous other states that do.

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