This morning, I read an article on LexisNexis's Insurance Law Blog that I think is a great "micro-treatise" on the topic of uninsured and underinsured motorist coverages (which are not the same, except in some states where they are). It's a section from New Appleman on Insurance Law Library Edition, and I think it is well-worth the read.
Read the article here.
A little background before I go into this in more detail. First of all, I'm not a lawyer. I'm not even a law student. Perceptive readers would have noticed that this title contains the abbreviation (if you can call it that) 0L, which means a person who is looking to start law school soon for those uninitiated in the law school jargon. What I am though is a licensed insurance agent with significant experience in the automobile insurance realm. I have spent a good deal of time studying uninsured and underinsured motorist coverage (probably more than most lawyers that don't specialize in insurance defense), and am pretty well versed in the topic.
Now that that is out of the way and I can hopefully avoid the "how the hell do you know" comments that are inevitable in a 0L blog, let's get down to business.
My only real concern with this article is that it doesn't adequately describe what uninsured motorist coverage is, or what it is supposed to cover. I am assuming that that is because it was written for the legal professional that has a specific policy in front of him or her and a specific problem in mind. From my experience working in insurance, I have found that the vast majority of the public believes that uninsured motorist coverage is there to fix your car when you get hit by someone and they drive off. Not true!
First, there is no coverage for your automobile at all under an uninsured or underinsured motorist policy or clause. You might have a less common coverage called uninsured motorist property damage, but that coverage is not connected in any way to uninsured motorist coverage and is only available in some states. Further, uninsured and underinsured motorist coverages often require that the person who is at fault be identified and found to be negligent. This means hit and run doesn't count in most cases (some states do allow hit and run specifically). In the instance of uninsured motorist property damage coverage, I don't know of any state that allows hit and run victims to seek coverage. These would be handled as collision claims.
So, what does uninsured motorist and underinsured motorist coverage cover? Simply put, they cover bodily injuries. In insurance terms, that usually means medical bills, lost wages, etc. Anything that results from you being injured by the negligent operator.
What the section does do really well is describe the circumstances in which an insured may or may not claim damages under this type of policy. As you can see from the sections titled "Establishing That the Claimant is Legally Entitled to Recover" and "Determining Whether the Accident Involved an Uninsured or Underinsured Vehicle", the question of who can claim damages and when is not particularly cut and dried.
Another thing that I liked about this article was that it details the ways in which a claimant may seek damages even if they do not carry the coverage. Because there are statutory offer requirements in most states, your insurance agent's conduct during the application process as well as what documentation is available of your decision to not carry the coverage, may not be enough to deny you coverage.
Over the years, I have seen so many people skimp on this coverage because they either don't think they need it (I have health insurance is probably the biggest excuse I have seen) or they don't want to pay any more than they have to for insurance. Insurance is not a good place to skimp for your budget. The difference between carrying the state minimum required coverages on your auto policy and what you actually need is maybe $10-20 a month for most policies. On one declarations page that I have in my office with me at the moment, the cost of uninsured and underinsured motorist coverage for this couple's two cars is $12 per six months. A dollar per car per month. That's it. That's all it costs to not run the risk of being financially ruined because someone else made a mistake.
Many people look down on insurance defense lawyers these days. I'm not exactly sure why that is. Maybe it's just not that well paid and we all know that if you're not making $160,000 a year at BigLaw doing transactional work, you're a nobody. At least that is what some people think. Perhaps it is because in general the work involves trying to screw somebody who probably deserves and needs the money in order to save a client a few bucks that they can probably afford and realistically should pay.
Personally, I believe that because the purpose of insurance is indemnity, making a person whole again, the most liberal interpretations of the law should reign when it comes to settling claims in good faith. Fortunately for me and for my clients, I worked for a good mutual company who thinks the same way I do and usually does the right thing.
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