Importance of Underinsured Motorist Coverage in Multi-Victim Car Accidents
Underinsured motorist coverage is one of the most important coverages you can buy when you purchase automobile liability insurance, as it provides protection for you and your family when you are involved in a serious accident.
The most common scenario is when you have been seriously injured in a car accident by a driver who has inadequate insurance to cover the damages they cause, and you have a higher policy limit on your underinsured motorist coverage. For example, if you have underinsured motorist coverage with policy limits of $100,000 per person and $300,000 per accident and are hit by a driver who has the state minimum of $20,000 per person and $40,000 per accident and sustain $80,000 in damages, the insurance company for the at-fault driver would pay its $20,000 policy limits and then your insurance company would pay you another $60,000 in your underinsured motorists coverage claim. That way, you would be fully compensated for the injuries you suffered in the car accident. You have $80,000 in damages and received $20,000 from the other driver’s insurance company and $60,000 from yours, for a total of $80,000.
One of the little-known quirks of underinsured motorist coverage is that it applies not just in the situation described above, but also applies in situations where the policy limits are exhausted by payment of other claims, but you have not been fully compensated. The most common scenario where this occurs is where there is a serious car accident where there are multiple people injured who are all making claims against the same insurance policy. When that occurs, if the policy limits are fully paid and out and you have not been fully compensated, you can make a claim against the underinsured motorist coverage on your own policy to make up the difference until you are fully compensated.
A real-life case example may help illustrate the point:
We represented a young man who was a passenger in a taxi cab in Chicago. All taxis in Chicago carry insurance policies with a $350,000 per accident single limit policy. Our client was insured with State Farm with underinsured limits of $50,000 per person and $100,000 per accident. Because the single limit on the cab’s policy was higher than the clients underinsured motorist limits, some lawyers may think that there is no potential for a underinsured motorist claim.
The cab made a left hand turn in front of a motorcycle. As a result of the motorcycle accident, the driver of the motorcycle lost his leg; his passenger suffered spinal injuries. The client, who was in the back seat of the cab when the motorcycle crash happened, was thrown against the bulletproof shield between the front and back of the cab and suffered dental injuries. The driver of the motorcycle did not have any UIM coverage, nor did his passenger.
We settled with the cab company for $500, and allowed the motorcycle driver and his passenger to split the remaining coverage for the taxi. We then pursued the underinsured motorist coverage through the client’s policy with State Farm based on the theory that he was not fully compensated for his injuries from the car accident, even though the taxi’s policy limits had been exhausted by payment of claims. State Farm agreed and paid the client an additional $13,000 to settle his case, allowing him to be fully compensated for the injuries he suffered in the taxi accident, even though the number of injuries and the severity of the injuries were such that there was not enough money to go around to cover all of the victims of the taxi accident.
The bottom line: in the event of a multi-victim accident where there is not enough insurance coverage to go around, look to underinsured motorist coverage to assure full compensation.