You’ve probably heard the saying: you can’t get something from nothing. The source of that phrase may be unclear, but the meaning is not: if the money isn’t there, you can’t collect it.
At Skinner Law Firm, this comes up more often than we’d like—especially when it comes to collecting debts or paying claims. We’ve even given it a name: The Empty-Pocket Rule. When the person who caused the harm doesn’t have enough money to cover the damages—which may run into the thousands or millions of dollars—most of the time, the only real source of payment is liability insurance. But sometimes, even the insurance isn’t enough.
Take car wrecks, for example. Most states require drivers to carry liability insurance. In West Virginia, it’s $25,000; in Maryland, $30,000; and in Virginia, depending on when the policy started, between $25,000 and $50,000. As you can see, the coverage varies—and none of it goes very far in a serious accident.
That’s where underinsurance coverage comes in. (Quick tip: talk to your insurance agent about maximizing your underinsured motorist coverage, or UIM. This protects you when the other driver doesn’t have enough coverage.) Often there’s at least some insurance available. But when injuries are severe, and both the liability limits and your own UIM aren’t enough, we have to ask: where else can recovery come from?
That’s when we start digging. Did the at-fault driver have an umbrella policy? Were they driving for Uber, Lyft, or delivering food? Were they running a work errand? Were they overserved at a bar? Was the vehicle defective? When basic insurance doesn’t cut it, we look for other responsible parties.
But sometimes, there’s simply no one else. Recently, we handled two cases where elderly drivers hit motorcyclists, causing life-changing injuries in one and death in the other. They had minimal insurance, weren’t working, were sober, had no significant assets, and no one else was involved. The Empty-Pocket Rule kicked in: there was nowhere else to turn.
Occasionally, clients want to pursue the other driver personally. In most cases, that’s not practical. Refusing the insurance settlement means filing suit, waiting a year or more for trial, spending thousands in litigation costs, and even if you win, the driver may simply declare bankruptcy. Wage garnishment? Possible, but you’ll likely see only small payments, most of which go toward legal fees first.
Now, there are rare exceptions—like when punitive damages apply, or when the at-fault party has significant assets, real estate, or a future inheritance. In those cases, going beyond the policy limits may make sense. But most of the time, The Empty-Pocket Rule can’t be beat.
THE BOTTOM LINE: Buy as much Underinsured Motorist Coverage as you can reasonably afford.