What Is the “Coots Procedure” and How Could It Affect My Kentucky Car Accident Settlement?

While Kentucky law requires all drivers to carry liability insurance to cover potential car accidents, the minimum required coverage is just $25,000 per person or $50,000 per accident. Yet many car accidents result in serious injuries that far exceed such minimums. In those situations, the victims may turn to their own underinsured motorist (UIM) coverage for additional benefits.

UIM coverage is optional insurance under Kentucky law. This means you do not have to buy it. But it is a good idea to have some UIM coverage as it can help “bridge the gap” between the amount of your accident-related losses and the limits of the negligent driver’s insurance policy.

Uninsured Motorist Coverage and Subrogation Rights

In a 1993 decision, Coots v. Allstate Insurance Co., the Kentucky Supreme Court established a process to allow an accident victim to settle a personal injury claim with a negligent driver while retaining the victim’s right to seek UIM coverage from their own carrier. The Kentucky General Assembly later codified this “Coots procedure” into state law. Among other facets, the Coots procedure enables the UIM carrier to exercise its right to “subrogation.”

What is subrogation? Basically, it is when an insurance company seeks reimbursement of money that it has paid to a policyholder from a third party. Here is how this works with respect to the Coots procedure. Let’s consider a hypothetical car accident involving Joseph and Stephanie. Joseph runs a red light and hits Stephanie’s car in the intersection.

Joseph admits fault for the accident. Stephanie, Joseph, and Joseph’s insurance company then enter into settlement talks. The parties agree that Stephanie suffered about $50,000 in damages as a result of the accident. But Joseph only has $25,000 in liability coverage. Since a settlement would therefore create an underinsured motorist claim for the excess $25,000, the Coons procedure requires Stephanie to notify her UIM carrier of the tentative settlement. The UIM carrier then has 30 days to consent to the settlement.

Alternatively, Stephanie’s UIM carrier can advance her the full amount of the proposed settlement and, once the settlement becomes final, seek reimbursement from Joseph and his insurance company through subrogation. Essentially, Joseph and his insurer would then be liable to Stephanie’s insurance company rather than to Stephanie herself.

However, if Stephanie’s insurance company does nothing within the 30-day notice period, i.e., it does not advance her any settlement funds and reserve its right to subrogation, then Stephanie can proceed with the settlement and present a UIM claim to her insurance company for the excess amount that Joseph’s insurance does not cover. Stephanie’s insurer would still be liable for this excess amount, but it would not have the right to seek reimbursement from Joseph or his insurance carrier.

Contact a Madisonville Car Accident Attorney Today

Dealing with multiple insurance companies following an auto accident can quickly get complicated. That is why it is best to work with an experienced Madisonville car accident lawyer who can represent you throughout the process. Contact Whitfield Crosby & Flynn today to schedule a free consultation. We have offices in Madisonville, Kentucky; Chattanooga, Tennessee; and Indianapolis, Indiana.

Source:

apps.legislature.ky.gov/law/Statutes/statute.aspx?id=54466