This article will explain the uninsured and underinsured driver insurance coverages in your automobile insurance policy, and how you can use them after a car accident.
You use your uninsured motorist coverage if you are hit by a driver who carries no car insurance, and the accident is deemed to be that driver’s fault. If that happens, you would generally not bother trying to sue the uninsured driver. Drivers who have no car insurance generally don’t have any money either. Instead, you would make a claim against your own insurance company up to the limit of your uninsured driver coverage.
Underinsured driver coverage is for when you are hit by a driver who carries insufficient car insurance, and the accident is deemed to be that driver’s fault. Insufficient insurance means that the negligent driver does not have enough insurance to cover your damages. In that case, you would make a claim against your own insurance company up to the limit of your underinsured motorist coverage, but only if your underinsured driver coverage is greater than the negligent driver’s policy limits.
Let’s take an example. Let’s say that your case is worth $200,000, but the negligent driver only has $100,000 of coverage. In that case, you can make an underinsured driver claim against your own insurer as long as you have more than $100,000 in underinsured driver coverage. If you had $150,000 in underinsured driver coverage, you would settle with the negligent driver for $100,000, and would settle with your insurer for $50,000. You cannot take the negligent driver’s $100,000 policy and another $100,000 from your policy. You can only take from your policy that amount that exceeds the negligent driver’s coverage.
Another important thing to know about uninsured and underinsured driver coverage is that those coverages cannot exceed the amount of your primary coverage. For example, if you have $100,000 in coverage for your own potential negligence, you can only have up to $100,000 in uninsured or underinsured coverage. That’s just a financial issue for insurers. Uninsured and underinsured coverage is very cheap compared to regular liability coverage, so insurers don’t want their insureds purchasing only the minimum liability coverage and then loading up on uninsured and underinsured coverage.
If you have reason to believe that the driver who hit you is uninsured, you should give your insurer notice as soon as possible, letting them know that you intend to file an uninsured claim.
Some car insurance policies place strict deadlines on their insureds when it comes to notification of potential uninsured claims. Don’t delay. The deadline could be as brief as 30 days. If the other driver tells you that he/she does not have car insurance, or, if he/she refuses to give you any insurance information, and you can’t get the insurance information in any other manner, inform your insurer immediately that you intend to file an uninsured claim against your insurer.
An underinsured driver claim will generally take a little longer to develop. You usually are not going to know right away that you are going to have an underinsured driver claim until your medical treatment progresses and you and your lawyer get a better understanding of the value of your car accident case. But once you or your lawyer believe that your case is worth more than the defendant’s liability coverage, you must inform your insurer immediately that you intend to make an underinsured driver claim against it.
In general, an uninsured or underinsured driver claim progresses in the same way as a regular car accident claim, except that the claim is against your own insurance company. There will be pretrial investigation, disclosure of your medical records, and depositions of witnesses. But one very important difference is that, if you and the insurer cannot agree on a settlement figure, you cannot file a lawsuit against your insurer.
Instead, you have to submit your claim to binding arbitration, which is a more informal procedure than a court trial. An arbitration is a hearing in front of an arbitrator (or sometimes a panel of three arbitrators), and the arbitrator or arbitrators will decide who wins. The down side of binding arbitration is that, unlike a court trial, the losing side in an arbitration has very limited rights of appeal. Basically, the losing side in a car accident arbitration is stuck with the decision.