Uninsured (UM) and Underinsured (UIM) Coverage
Our clients often ask us about the meaning and importance of various types of insurance coverage. One of the insurance types that frequently come into play in a personal injury case is Uninsured/Underinsured Motorist (UM/UIM) coverage. UM/UIM insurance covers the insured in case of an accident where (a) the liable party was not located, e.g. hit-and-run accident; or (b) the negligent driver had no insurance coverage; or (c) the negligent driver had insufficient policy limits. For example, the law in Virginia requires only $25,000 per person bodily injury liability coverage. This means that many drivers in Virginia have only $25,000 policy limit to pay for the injuries they can cause by their negligence. In such a case, the victim or the family of the victim have limited options. They must either accept the policy limit available or file a lawsuit to pursue additional recovery individually from the negligent driver. Unless the negligent driver has sufficient assets and income, this often results in a “goose-chase.” Even if the victim obtains a large verdict through litigation, the negligent driver will almost always declare a bankruptcy and evade collection efforts.
To allow a prudent driver to avoid such a quandary, the law allows drivers to purchase additional coverage called Uninsured/Underinsured Motorist coverage. Your UM/UIM insurance covers the difference between your UM/UIM policy limit and the liability policy limit of the negligent driver. For example, purchasing a $100,000 UM/UIM policy ensures that you will have at least $100,000 in bodily injury coverage in case of an accident caused by a negligent driver. If the negligent driver has a liability coverage of $25,000, then your UM/UIM insurer will cover the remaining $75,000 to get you to the $100,000 in insurance coverage promised under the UM/UIM policy. The limits of UM/UIM insurance can be as much as the insured desires, as long it is not less than the insured’s liability coverage. In other words, in Virginia, if you desire to have $X amount of insurance for your own injuries suffered from negligence of others, you must obtain the same $X amount of insurance for the injuries to other that you may cause by your own negligence.
One may mistakenly think that buying additional UM/UIM coverage is unimportant and the idea of ever needing UM/UIM coverage may seem too distant. It is a mistake to think so. Though you may be certain of your own careful driving, you may never control or predict the care and prudency of the other drivers. Every year, there are over two million traffic accidents involving injuries in the United States. Over thirty thousand deaths from auto accidents. Even a minor rear-end accident typically causes injuries ranging from soft muscle injuries to a permanent disfigurement, herniated disk, concussion or bone fractures. In addition to thousands in medical bills, the injured party is also usually entitled to a compensation for loss of earning capacity, lost income, future medical expenses, pain and suffering, and other non-economic damages. For example, typical loss of earning capacity can entitle the claimant to hundreds of thousands in lawful compensation. Even in a minor accident, all of these damages often add up to over $100,000 in possible compensation. If the liable party has minimum policy under Virginia and you have no UM/UIM coverage on your own policy, then you are practically stuck with only $25,000 insurance limit. If an accident results in a concussion, fractures, or permanent injuries, the value of the case can be worth hundreds of thousands or millions of dollars. In such a case, having an additional UM/UIM coverage becomes crucial. As an example, our firm recently handled a case of a young man, whose car was hit at a high speed by an unknown driver who fled the scene and was never found. The accident was so strong that it caused severe permanent injuries to the client who was crippled for life. Even though his medical bills alone exceeded $145,000, unfortunately, he only had $25,000 in Uninsured Motorist coverage.
You may ask that, since everyone now has (or at least should have) health insurance, why would you need additional UM/UIM coverage? First, your health insurance will not cover your pain and suffering and lost wages. Secondly, Virginia law allows the victim to double-recover the medical bills. This means that, if you have a health insurance, you can use your health insurer to pay for the medical bills, and then you can turn around and demand the full price of your medical bills from the liability insurance of the negligent driver or your own UM/UIM insurance. Additionally, if you have a Personal Injury Protection (PIP) or MedPay coverage, you can practically triple-recover the cost of your medical treatment and pocket the difference. Below is an example of a case we successfully handled for a client who had good insurance coverage.
As a result of a rear-end accident, our client suffered a bulged disk and incurred $17,500 in medical bills. The negligent driver’s liability policy limit was only $25,000. Our client had a good health insurance, $15,000 in Personal Injury Protection (PIP) from three insured family vehicles, and $100,000 in Uninsured/Underinsured coverage. Her health insurance paid all her medical bills in full. Her PIP paid full policy of $15,000 to her. The negligent driver’s insurance paid $25,000, which included $15,000 for medical bills and $10,000 for pain and suffering. Her UIM insurance paid $55,000. In the end, the client recovered $95,000 even after all her medical bills were paid in full. This was only possible because she had UIM coverage as well as Personal Injury Protection coverage.
The other legitimate question one may ask is “will my insurance cost increase if I use UM/UIM policy?” Under Virginia law, insurance companies are allowed to increase your premium for automobile accidents where you, a member of your household, or other customary operator of the vehicle were wholly or partially at fault and for convictions appearing on an insured’s driving record. If you feel that your premium has been increased because of an accident that was not your fault, you may ask the Bureau of Insurance to review the premium increase due to the accident.
Determining the amount of UM/UIM insurance coverage applicable to a specific case is not as simple as it may seem. For example, if A was involved in an accident while driving B’s vehicle, which UM/UIM policy will apply? A’s own policy or the policy on B’s vehicle? Can they be stacked up? What if A had two vehicles of his own with different policies, can those policies stack up? How does a UM/UIM policy of a household member of A or B affect the total amount available? All these are important questions that can only be answered through careful legal research and analysis.
Most UM/UIM claims get rejected or lowballed by the insurance adjusters. This is so because, in Virginia, unlike the liability insurers, the UM/UIM insurers do not have a duty of good faith. So, unless the insurer sees that the claimant is represented by a competent and aggressive lawyer, the UM/UIM insurer will almost always either reject the claim or handle it unfairly. Therefore, having a good legal representation is important to determine all sources and amounts of insurance coverage and to achieve the most successful result.
At I.S. Law Firm, our attorneys have the experience necessary to fight claims and lawsuits on your behalf, and get you the compensation you deserve. Accidents will always happen, but our job is to do everything possible to make sure you recover from your injuries and that you are compensated for your time, expenses, and pain.
I.S. Law Firm will represent you on a contingency basis—that means you pay no legal fees until we recover money for you. For a free initial consultation and case evaluation, please contact us immediately by calling +1-703-527-1779 or via e-mail: [email protected].