Understanding what the policy limits numbers mean is the
first step in understanding the various types of coverage. In the example above, $20,000 per person
means that the most the at-fault driver’s insurance company would have to pay
to a single person injured due to the negligence of its insured is $20,000 for
a particular accident. The $40,000 per
accident limit applies to the maximum the insurance company will ever be
required to pay for an accident no matter how many people were injured and no
matter how significant the injuries. For
example, assume 4 people were injured due to the negligence of a driver with
this type of policy. Every person in the
wreck had treatment consisting of over $30,000 in medical bills. No one person of the 4 may receive more than
$20,000 for their injuries (inclusive of medical bills). Additionally, the maximum the insurance
company is required to pay out to all 4 of the injured parties is a TOTAL of
$40,000!
Fortunately, many of us purchase what is known as underinsured motorist coverage. Like uninsured motorist coverage,
underinsured coverage puts your own insurance company in the shoes of the
negligent party when the negligent party does not have enough insurance
coverage to pay for an accident victim’s injuries. Typical underinsured motorist policies are
written with limits from as low as a minimum of $25,000 to a maximum of
anywhere from $300,000 to $500,000. Additionally,
some people choose to purchase a PLUP or personal liability umbrella
policy. PLUP coverage picks up where the
regular auto insurance policy leaves off.
For instance, assume you have an auto injury with damages that are
equivalent to $1,000,000. The person
that caused the accident has an auto policy with limits of $300,000. You can recover the $300,000 from the auto
carrier and attempt to recover the remaining $700,000 from the PLUP policy if
the at-fault driver has one.
Many clients ask why they must pursue their own insurance
when they were not at fault. It is a
great question and one with a variety of answers. One important reason why you should is
because you are paying for these premiums in case the exact scenario above occurs. If you pay for these premiums for the rest of
your life and choose not to access them even when you need them, the insurance
company enjoys a substantial windfall.
The other question that is often asked is why not go after the at-fault
party individually and garnish his or her wages. This is often a hopeless endeavor which
results in chasing an individual and his or her assets across the country in
order to satisfy the judgment. Furthermore,
if the judgment is large enough, the person may simply file bankruptcy and you
will be lumped in with other creditors.
There are many procedures that one must follow in pursuing
an uninsured or underinsured motorist claim.
One of the first is the demand of arbitration. The arbitration process, rather than a jury
trial, is the means by which an uninsured or underinsured motorist claim is
resolved if settlement is not feasible. Some
insurance carriers have written a time limitation within its policy which acts
as a statute of limitations. Under this
particular policy provision, if arbitration is not demanded within the
specified time period, usually 1-2 year from the date of accident, your
uninsured or underinsured motorist claim will be extinguished.
If you reach an agreement to settle for the policy limits of
the negligent party’s insurance carrier, you must get the permission from the
underinsured motorist carrier to accept the settlement. Failure to do so will likely extinguish your
claim. Moreover, you must be careful not
to sign away your rights to the underinsured motorist claim when settling and
signing a release with the at-fault carrier.
Most releases release EVERYONE!
Many of the releases I review in such cases require a substantial amount
of amendments and additional language protecting the underinsured motorist
claim. Finally, one must be cognizant of
the set-off that an underinsured motorist carrier is entitled to from the
monies already received from the at-fault party.
With any type of case, it is always best to engage in a free
consultation with an attorney who practices plaintiff personal injury law so that
you do not do anything to jeopardize your claim. In the case of the various inner workings of uninsured
and underinsured motorist claims, this is especially true.
1 comment:
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