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Coverage Concerns Uninsured/underinsured motorist coverage Inform insureds of coverage options before attorneys do By Roy C. McCormick “Check your insurance to see if it includes uninsured motorist coverage.” An attorney offered this advice during a commercial segment of “Judge Judy,” the popular courtroom television show. The attorney then continued, “In my opinion uninsured motorist coverage is the most important automobile insurance coverage you can have.” He went on to stress the impact of serious car accident injuries on insureds in terms of often insurmountable and ongoing costs, and said when the other driver is at fault, UM coverage can be a lifesaver. Certainly insureds need to learn about the importance of adequate uninsured motorist coverage, but what will they think if they hear about this protection from a lawyer on television rather than from those who provide their insurance protection? Uninsured motorist coverage provides protection in the event that an insured person’s injury is caused by a negligent uninsured driver. “Insured person” includes a relative as defined, any person occupying a covered vehicle, and any person entitled to recovery because of bodily injury suffered by any of the foregoing persons. Underinsured motorist coverage, in combination with uninsured motorist coverage or separately, protects a described named insured and other insured persons when they are legally entitled to recover damages for bodily injury caused by a negligent driver; and it applies, within specified limits, when the negligent driver has valid and collectible bodily injury liability insurance, but in an amount insufficient to indemnify the claimant or claimants. Claim would be made for either uninsured or underinsured damages, but not for both features of the protection. They are mutually exclusive, although the insuring provisions are widely combined by insurers in a single policy. Uninsured/underinsured motorist coverage is written in connection with auto liability (bodily injury) insurance. The offer is currently required in all states except Michigan, New Hampshire and Wisconsin. The insured has the option to reject it in most—but not all—states. Obviously, agents, brokers, customer service representatives and employees of insurance companies who advise insureds must be informed on the scope of coverage and the requirements of the state involved, so they can discuss the subject with insureds when coverage is arranged. How would the provider feel if an insured asked about the coverage because he or she learned about it from a law firm’s television and then learned that it was not effective under the policy and had never even been discussed? Court decisions have underscored the importance of writing UM coverage in appropriate limits within the range that is available to an insured. Guidelines are provided in an Ohio case—Beckman v. Prudential Insurance Company et al., reported in North Eastern Reporter 2d 884. A woman was seriously injured in a car accident allegedly caused by the other driver. She had previously carried UM coverage in the same high limit as her bodily injury liability coverage. Her agent had switched the insurance to another insurer in response to her wish to reduce the cost, partially accomplished by writing UM coverage in a minimum amount. The insured and her husband believed that the new policy provided the same protection as the former one. The court concluded that “an agent selling auto insurance has a duty to explain underinsured motorist coverage as well as to explain the consequences of insufficient limits.” It held that damages, if any, would be as if the insured’s UM limits were equal to her BI coverage limits, as under the previous policy. Several law firms in states where bodily injury liability coverage is not mandated have stressed the importance of uninsured motorist coverage. The subject has recently been picked up by the media, which stressed the importance as well as availability of the coverage. The need to explain significant optional coverages to insureds extends to other exposures as well. Automobile comprehensive coverage should be encouraged for many people, although collision coverage is often dropped when car loans and or car value diminishes. Theft, wind and water damage continue to be significant sources of loss. Flood damage to dwellings and their contents not covered by homeowners policies is a real concern and warrants discussion with insureds despite regular media explanation by the National Flood Insurance Program and insurers. Scheduling of valuable personal property is an option that can be of importance to many insureds. Specific items and classes of personal property may be insured for their full value against risks not covered under basic homeowners personal property insurance. The insurance industry certainly encourages widespread communication regarding these matters; however, let’s just make sure that we are the first ones to bring them to the attention of our insureds! * The author |
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