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Does Homeowners’ Insurance Cover Personal Injury Claims?

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Archive: Jun 2021

Does Homeowners’ Insurance Cover Personal Injury Claims?

If someone sustains an injury at a person’s home or property, who ends up paying compensation to the injury victim? Will the injury that can be responsible for paying their own medical bills? Will the home or property owner be responsible for paying compensation?

These are excellent questions that are asked quite often by injury victims and homeowners throughout California. The reality is that homeowners’ insurance policies will typically kick in to cover any personal injury claim that is filed as a result of an incident on the property. Here, we want to discuss how homeowners’ insurance claims work in these situations.

Most Common Homeowners’ Insurance Injury Claims

There are various ways that individuals can end up sustaining injuries on another person’s property. Some of the most common ways in which claims against homeowners’ insurance policies arise include the following:

  • Dog bite incidents
  • Slip and fall incidents
  • Intoxication of a guest
  • Injured domestic workers
  • Injuries caused by inadequate maintenance

This is certainly not an exhaustive list of the ways that injuries can occur on another person’s property. If you have any questions about whether or not you have a valid claim, please reach out to a skilled personal injury lawyer in California as soon as possible.

Injury Liability Coverage in the Homeowners’ Insurance Policy

The injury liability coverage on a person’s homeowners’ insurance policy will typically cover all of an injury victim’s losses associated with the injury. This includes their:

  • Medical bills
  • Lost income
  • Pain and suffering damages
  • General household out-of-pocket expenses

The homeowners’ insurance injury liability coverage will pay for these expenses up to the limits set forth under the policy. For example, if the homeowners’ insurance policy has $200,000 in liability coverage, the injury victim could recover up to that amount. In general, most insurance claims end up settling for an amount that is at or below the policy limits.

However, in cases where an injury victim has suffered a serious or permanent injury, the claim may indeed go above the policy limits. In these cases, the injury victim may have to file a personal injury lawsuit against the homeowner, which can leave the homeowner personally liable for the amount in excess of the policy.

Will This Coverage Include Legal Defense?

When a person has a homeowners’ insurance policy, this will come with the benefit of having legal defense provided on their behalf to represent them against any claim brought by an injury victim. This is a benefit that not many people think about when they get homeowners’ insurance policies. The insurance carrier will typically appoint or pay for a personal injury attorney to handle any lawsuit that arises due to an underlying injury incident on the person’s property.

When someone sustains an injury at another person’s home, they will file their claim against the homeowners’ insurance policy, not directly against the homeowner. In these cases, the injury victim will typically have to show that the homeowner somehow failed to exercise reasonable care when keeping their property free from hazards.

However, there are cases where negligence will not have to be proven in order for the injury victim to recover compensation. The most likely example of this in California will arise due to dog bite incidents that occur at a person’s home. California is governed by a “strict liability” dog bite law, which means that a person can usually make a claim for their losses under a dog owner’s homeowners’ insurance policy without having to prove that the dog owner was at fault.

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Can Personal Injury Settlements Be Garnished for Child Support?

If you are expecting to receive a personal injury settlement or jury verdict award amount after sustaining an injury caused by the actions of someone else, you need to know what will happen to this money if you also owe back child support. The reality is that officials in the state of California are very strict about collecting child support, as they should be. But there are various reasons why individuals get behind on these payments, and not all these reasons are nefarious. Regardless of why you may be behind on your child support payments, you need to know what will happen when your personal injury settlement comes in.

Important Child Support Terms You Need to Understand

First, we do need to point out that child support is not optional. If you have been ordered by the court to pay child support payments, you absolutely have to make them. If you miss a payment, this does not make the payment go away. Back child support will gather interest, and individuals will end up paying even more. The state of California will go after a person’s income, bank accounts, and tax returns to recover unpaid child support.

Two of the most common terms that come up over and over in these cases include “arrear” and “lien.”

  • An arrear is money that a person owes which should have been paid at an earlier date. For example, we will often hear the phrase that person has outstanding child support arrears.
  • A lien refers to a person’s right to keep the property or possessions owned by another person until the individual repays the debt that they owe. For example, a title loan company may place a lien on a car title if you borrowed money from them.

So, how do these two terms relate to child support?

If a person is late on their child support payments, then they will technically be in arrears, and the state may put a lien on their property. When we are talking about personal injury cases, it is possible for the state to put a lien on the personal injury settlement.

The State has the Power

The state of California has significant authority to garnish a person’s wages in order to collect unpaid child support. Because child support payments come about as a result of a court order, the state will force a person to pay it. If the other parent who has not received the support requested legal assistance in the past to recover child support payments, there may already be a lien in place. Usually, individuals received a certified letter from the state letting them know about the child support that they owe.

If the state does decide to come after a personal injury settlement that you receive in order to pay down your child support debt, you and the insurance company that will be paying the claim will be notified.

However, there are other expenses that will be paid before the child support arrears are collected. First, your medical bills and attorney fees will be paid out of the personal injury settlement before the remainder is to be distributed to you. The remainder that goes to you can be garnished by the state to pay the child support arrears.

Work With an Attorney

We strongly suggest that you work with a skilled attorney when it comes to getting your personal injury settlement affairs in order. If you are aware that you owe child support payments, let your attorney know this ahead of time so they will not be caught off guard by the state coming after the personal injury settlement. Your personal injury attorney will be able to guide you through this process and come up with a solution that is most beneficial for you but that also satisfies the debt that you owe. Please understand that there is no way to get around paying child support arrears. If the state wants to come after you for these payments, they are going to do so, and they will do so vigorously.

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Can Creditors Take My Personal Injury Settlement?

Anytime a person is injured due to the careless or negligent actions of another individual or entity, they may be entitled to various types of compensation for their losses. In some cases, this comes in the form of an insurance settlement or a personal injury jury verdict.

However, what happens if the person who receives a personal injury settlement also owes money to others? What if they are going through bankruptcy? Can creditors take a personal injury settlement?

Here, we want to discuss whether or not creditors can take a personal injury settlement in the state of California. This is important for people to know, particularly if they do owe money to others and are expecting to receive a settlement after sustaining an injury.

Personal Injury Settlements Are Considered Exempt

Personal injury settlement monies are generally considered “exempt” when it comes to whether or not creditors can take the money. This means that a creditor cannot reach into a person’s bank account and garnish the amount. Additionally, if a person files for bankruptcy, they will get to keep all of the money paid to them through the personal injury settlement, even if it was a substantial amount.

However, there are steps that individuals need to take to protect personal injury settlement money in these situations.

Keep Funds Separate

If you are expecting to receive a personal injury settlement check, you need to deposit the money into a separate account from all over other finances. After you do this, you should not deposit any other type of money in the account that is not related to the personal injury settlement. Keep this account separate from everything else. If you commingle these funds with any of your other money, this could result in the personal injury settlement losing its exemption status.

If you or your family members have another source of income, make sure that goes into an account other than the one where your personal injury settlement is. You need to make sure that you can account for every dime inside the personal injury settlement account and prove that it came from the actual settlement.

Use Prepaid Debit Cards

If you know that creditors hold judgments against you, we suggest depositing your personal injury settlement onto a prepaid debit card and avoid a normal bank account altogether. While this may seem like a hassle, the reality is that many retailers offer prepaid debit cards that act just like any other debit card you may use.

We want to stress the importance of using a “prepaid” debit card. This card cannot be tied to any bank checking or savings accounts. Yes, there will likely be a small monthly fee attached to a prepaid debit card, but there will be virtually no way for any collections agencies or creditors to garnish the money on this card.

However, when you do go with a prepaid debit card route, you need to also make sure that you only deposit money onto that particular card related to your personal injury settlement. This will again ensure that the funds are not commingled.

Work With an Attorney

If you are expecting to receive a personal injury settlement, we hope that you have already retained assistance from a California personal injury lawyer. A personal injury attorney in Orange County will be able to help you navigate any of the roadblocks that you may run into if you owe money to creditors or are going through the bankruptcy process. Your attorney will have dealt with this before and will be able to help you establish the best path towards receiving your full settlement amount.

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Are Personal Injury Settlements Marital Property?

Personal injury settlements are crucial, particularly if a person has been injured due to the careless or negligent actions of another individual or entity. However, what happens if a person receives a personal injury settlement and subsequently gets divorced from their spouse? Will the personal injury settlement be considered marital property for the purposes of divorce? Will it have to be split between the two parties?

Here, we want to discuss whether or not personal injury settlements are considered marital property in the state of California.

How Property Division is Handled in California

When we turn to California law regarding property division, we can see that this is a “community property” state. This means that property acquired during the course of the marriage will be considered marital property, and must be divided equally. Any property that is considered separate property acquired before the marriage (or in a few circumstances during the marriage) will belong to the party who originally acquired the property.

What Will Happen to a Personal Injury Settlement?

When we are considering what happens to a personal injury settlement or jury verdict during a divorce, we have to look at the various types of compensation paid out in these cases. In general, we will see that personal injury victims receive both economic and non-economic compensation.

  • Economic compensation. This is also called special damages and refers to the types of compensation that are relatively easily calculable after an injury occurs. This type of compensation is generally used to cover the following:
    • Medical bills related to the injury
    • Lost wages if the victim cannot work
    • General household out-of-pocket expenses
    • Property damage expenses
  • Non-economic compensation. This is also called general damages and refers to the types of compensation that are more personal to the injury victim. These damages are harder to calculate because they do not come with bills or receipts that can be added up. Some of the most common non-economic compensation types include the following:
    • Pain and suffering damages
    • Emotional distress damages
    • Loss of quality of life damages

Splitting a Personal Injury Settlement

Some of the compensation paid in a personal injury settlement may indeed be considered community property for the purposes of a California divorce. For example, if two people were married, then both individuals likely suffered losses as a result of the injury, particularly if there were medical bills, lost wages, and other out-of-pocket expenses. Because this type of loss affected both parties, the economic compensation awarded in a personal injury case will likely be considered community property and need to be divided equally during the divorce.

However, the non-economic compensation is a different story. This type of compensation is paid to the injured individual to compensate them for the suffering that they alone have been through. It would not be fair for a spouse the benefit from this type of compensation if the pain and suffering and loss of enjoyment of life did not affect them. In general, we will find that the non-economic portion of the personal injury settlement will be considered separate property for the purposes of a divorce in California.

If you are involved in an ongoing personal injury case but are also going through a divorce, you need to speak to an attorney as soon as possible. In fact, we strongly suggest that you work with a personal injury attorney in Orange County to handle your injury case and a divorce attorney to handle the divorce case. Your two attorneys can communicate with one another about the best steps moving forward to ensure that you are protected throughout this process.

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