How Policyholder’s Declaration Of Bankruptcy Will Impact Your Personal Injury Case

Amidst the current COVID-19 pandemic, more retailers and individuals than ever will be declaring bankruptcy due to the severe detriment that coronavirus has impacted and will continue to impact our economy with. Understanding your rights as an injured claimant is paramount during this unprecedented time. Bankruptcy filing will have a significant impact on your premise liability claim from a slip and fall to dog bite resulting in injuries for the claimant.

What Happens To A Claim When A Policyholder Is Declared Bankrupt?

Generally speaking, when a policyholder is declared bankrupt, it does not release the insurance company from their liability. However, if the party at fault lacks insurance or maintains a self-insured retention policy (SIR) then upon achieving a verdict the settlement amount gets added to the list of general creditor.  The same applies for the unpaid self-insured retention balance from an insurance claim, but the insurance company remains liable for any verdicts in excess of the SIR limit. General creditors fall behind secured creditors in line to receive the income owed to them from the individual in insolvency.

Insurance Claims Involving a Bankrupt Policyholder

With very few exceptions, in general, courts will ensure that insurance companies obligations are upheld, even in the cases of bankrupt policy holders who can’t afford to pay any self-insured retention or deductible amounts potentially included in the insurance company’s policy.


The wording of the policy in such cases is an important factor in determining the outcome, however, other factors such as bankruptcy laws, public policy and state insurance laws come into play.


Distinguishing between a self-insured retention or a deductible is paramount here, as the two act differently from one another. In the case of a self-insured retention, the policyholder is usually required to pay this before the insurance company is obliged to uphold their end of the deal. However, with regards to deductibles, these are usually paid by the insurance company who then require the policyholder to recompense them with the sum spent. The difference between the two is important in order for analysis of who is ultimately obliged to pay if a policyholder is declared bankrupt.


With regards to deductibles, as these are paid by a policyholder following an insurance claim pay-out, the insurer can have a hard time getting this money back from a bankrupt policyholder. Due to the fact that they are not entitled to anything from the policyholder before the claim is paid, the insurer must pay the sum owed and then has to attempt to claim the deductibles through the bankruptcy system as a general creditor. As they don’t have the priority of a secured creditor, however, their claim to the deductibles can often be futile and in the majority of cases, insurers are left with the cost of this.

Self Insured Retention (SIR)

Across the board, courts rule that a liability insurance provider has to pay the entirety of its policy for covered liabilities, whether or not the policyholder is in insolvency or not. However, in the case of SIRs, the outcome can be a little bit more complex.

This Blog is made available by the law firm publisher, PEDRAM LAW, PC, for educational purposes.  It provides general information and a general understanding of the law, but does not provide specific legal advice. By using this site, commenting on posts, or sending inquiries through the site or contact email, you confirm that there is no attorney-client relationship between you and the Blog publisher. The Blog should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

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Why Choose Pedram Law for Fatal Car Crash Cases?

  • 1.

    Proven Success

    Pedram Law has a track record of securing substantial settlements and verdicts for their clients who have suffered the loss of a loved one in fatal car crashes. Their results are a testament to their unwavering commitment to achieving justice.

  • 2.

    Personalized Attention

    Pedram Law believes that every client is unique and deserves personalized attention. They take the time to understand your specific circumstances, enabling them to build a tailored case strategy on your behalf.

  • 3.

    Legal Expertise

    The attorneys at Pedram Law possess extensive knowledge and experience in handling fatal car crash cases in San Jacinto. They are well-versed in the intricate legalities surrounding such accidents and possess the skills necessary to navigate the complexities of the legal system.

  • 4.

    Compassion and Support

    Pedram Law recognizes that grieving families need more than just legal representation; they need emotional support as well. The attorneys and staff at Pedram Law are dedicated to providing both throughout the legal process.

  • 5.

    Transparent Communication

    Clear and open communication is a cornerstone of Pedram Law's approach. They keep clients informed about the progress of their cases, ensuring you are always aware of what's happening and have the opportunity to ask questions and address concerns.

Types of Fatal Car Crash Cases Handled:

Pedram Law has extensive experience in representing families and loved ones affected by various fatal car crash scenarios in San Jacinto, including:

1. Car Accidents Resulting in Fatalities
2. Motorcycle Accidents Leading to Loss of Life
3. Truck and Commercial Vehicle Collisions
4. Pedestrian and Bicycle Fatalities
5. Wrongful Death Cases
6. Drunk Driving Accidents with Fatal Outcomes

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