March 17, 2011
Previously published on March 14, 2011
If you are involved in an Auto Accident, what happens when the other motorist doesn't have insurance - or enough insurance coverage - to cover the value of the injuries resulting from the car accident? In my opinion, the insurance companies have not done, nor have the insurance agents in general done, a very good job in explaining Underinsured Motorist Coverage, nor in encouraging the public to obtain this coverage. This is just as important, if not more important, than Uninsured Motorist Coverage. In California, if one does not want Uninsured (UM) and/or Underinsured Motorist (UIM) Coverage, then the insured must specifically decline this coverage, and do so by signing a waiver for this coverage. If one gets on Uninsured Motorist Coverage, then one also gets Underinsured Motorist Coverage as well. The limits of coverage for both will be the same. That is if you have $15,000/$30,000 of UM, then the UIM coverage will also be $15,000/$30,000. How does Underinsured Motorist Coverage work?Underinsured Motorist Coverage is useful and available when you are hit by someone who has an insurance policy that is less than the value of your injury. For example, if you are injured in an auto accident, and your injury is worth $75,000, and the person that caused your injury only has liability insurance coverage of $15,000, then you are short $60,000. If you have UIM coverage that is in the amount of $100,000, for example, then you will have enough UIM coverage to be adequately covered and compensated. If that happens, then you will have to proceed against your own insurance company. This will take the case out of the county court system, and into binding arbitration. The case will be decided by the agreed upon arbitrator, not a judge or a jury. The hearing will take place at an office, and not at the court house. The hearing will take much less time, less than a day, as opposed to multiple days. However, there is no right to an appeal, in general. What happens if a California Auto Accident injury costs exceeds the insurance coverage?Often, we are asked what happens if my injury is $75,000 and the person that caused the injury has insurance coverage in the amount of $30,000, and I have a UIM policy with coverage in the amount of $50,000. Does that mean I have an additional coverage of $50,000? The answer is no. Your insurance company, from whom you purchased the UIM coverage, gets credit against the 50,000 for whatever you receive from the person that caused the injury. In this example, there would be $20,000 available against your UIM coverage. Therefore, your total recovery would be $50,000 ($30,000 from the person that caused your injury, and $20,000 from your own insurance company under the UIM coverage). As a result, you end up recovering $25,000 less than the value of your injury.
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