Uninsured/Underinsured Motorist Coverage & Legal Compensation
Uninsured Motorist (UM) coverage steps in when you are injured in an accident caused by a driver who has no liability insurance. This also typically includes hit-and-run accidents when the at-fault driver cannot be identified. Meanwhile, underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but their policy limits are insufficient to cover the full extent of your damages, such as medical bills, lost wages, and pain and suffering.
Whom Does My UM/UIM Policy Protect?
Your coverage is broader than you might think. It typically protects you, the policyholder, as well as family members who live in your household. It also generally covers passengers in your vehicle at the time of the accident. Furthermore, it can even compensate resident relatives and you for injuries as a pedestrian or bicyclist by an uninsured or underinsured driver.
Uninsured Motorist Property Damage (UMPD)
In addition to covering injuries, some policies include UMPD, which helps pay for repairs to your vehicle if it is damaged by an uninsured driver. This coverage is not available or required in every state and may have a different deductible or limit than your collision coverage.
The Claims Process
A crucial aspect of this coverage is that you are making a claim against your own insurance company. This can create an adversarial relationship, since your insurer's financial interests may conflict with your goal of receiving full compensation. Following an accident with an uninsured or underinsured driver, the process generally involves these steps:
- Notification: Report the accident to your insurer as soon as possible. There are often strict deadlines for initiating a UM/UIM claim.
- Documentation: Keep meticulous records of all accident-related expenses, including medical bills, lost income, and vehicle repair estimates.
- Investigation: Your insurance company will investigate the claim, which may include reviewing the police report, medical records, and witness statements.
- Settlement or Denial: Your insurer will either offer a settlement or deny the claim.
Be aware that your own policy’s Medical Payments (MedPay) or Personal Injury Protection (PIP) coverage will typically be the first source of payment for medical bills. Your UM/UIM coverage applies to cover damages that exceed those initial limits and damages not covered by PIP/MedPay, such as pain and suffering.
Common Legal Issues
Several legal issues can arise during the UM/UIM claims process, often leading to disputes between the policyholder and the insurance company.
- Proving Fault and Damages: Even though it's your own insurance, you still bear the burden of proving that the other driver was at fault for the accident and that your claimed damages are reasonable and necessary. This can be a point of contention, with insurers sometimes disputing the severity of injuries or the necessity of certain medical treatments.
- The "Physical Contact" Rule in Hit-and-Run Accidents: A significant hurdle in many hit-and-run claims is the "physical contact" rule. Many states require physical contact between the phantom vehicle and your vehicle or your person (or some other corroboration of the collision) for UM coverage to apply.
- Stacking of Coverage: "Stacking" allows you to combine the UM/UIM coverage limits from multiple vehicles you own or from multiple policies. This can significantly increase the total amount of coverage available to you. Whether stacking is permitted depends on state law and the specific language of your insurance policy.
Arbitration vs. Litigation
If your insurance company and you cannot agree on a settlement, your policy will likely dictate the next steps. Many UM/UIM policies contain a clause requiring that disputes be resolved through arbitration rather than a traditional lawsuit. Arbitration is a less formal process in which a neutral third-party arbitrator hears evidence from both sides and makes a decision, which is often legally binding.
Bad Faith Claims
Insurance companies have a legal duty to act in "good faith" when handling your claim. This means they must conduct a fair and thorough investigation, promptly evaluate your claim, and make a reasonable settlement offer. If your insurer unreasonably denies, delays, or underpays your valid UM/UIM claim, you may have grounds for a "bad faith" lawsuit.
Examples of bad faith conduct include:
- Failing to conduct a proper investigation into the accident.
- Unreasonably delaying the processing of your claim.
- Denying a claim without a valid reason.
- Offering a significantly lower settlement amount than what the claim is worth.
- Failing to communicate with you about your claim.
A successful bad faith claim can result in your recovering not only the benefits owed under your policy but also additional damages for the insurer's misconduct and possibly punitive damages.
