If a person is involved in an automobile accident and suffers personal injuries, there is often not sufficient insurance available from the responsible party to cover the damages and costs associated with the injury. In California, drivers are only required to have $15,000 in liability insurance per claimant, and $30,000 per occurrence. This will frequently be inadequate for persons seriously injured in automobile accidents.
To address this potential problem, many people purchase uninsured or underinsured motorist coverage. This kind of automobile insurance is issued by one's own automobile insurer, and provides coverage for personal injuries from an automobile accident exceeding the amount of insurance available from the negligent party's insurance company.
Uninsured and underinsured claims are unique claims. Coverage is only triggered if: (1) for an uninsured motorist claim, where there is no insurance available from the culpable parties for the injuries; and (2) for an underinsured motorist claim, where the available insurance has been collected, but is inadequate to cover the injury.
Triggering uninsured motorist claims is different than triggering claims for underinsured motorist coverage. The lack of insurance coverage for an accident from the person or persons at fault is usually readily apparent. In contrast, where insurance coverage exists for the negligent parties, but it is not enough, or may not be enough, to cover the injuries, triggering an underinsured motorist claim requires collecting the available insurance. California law states that underinsured motorist coverage is not available “until the limits” of the negligent driver's policy “have been exhausted by payment of judgments or settlements. . .” (California Insurance Code §11580.2(p)(3).) Thus, an injured person must collect the entire policy limit of the negligent party's insurance policy before his or her underinsured motorist claim is triggered.
Triggering an underinsured motorist coverage claim can become particularly complicated where the value of the injury is at or near the amount of policy limits available for the negligent driver. This is because the negligent driver's insurer may be unwilling to pay policy limits, yet the claim cannot be settled for less than policy limits otherwise the underinsured motorist claim is forfeited. It may sometimes be necessary to proceed to trial against the negligent driver to obtain his or her insurance company's policy limits, and trigger the underinsured motorist coverage claim.
Once an uninsured or underinsured motorist claim is triggered, if the injured policyholder and his or her insurance company cannot agree on the value of the claim, it must be submitted to arbitration. Only after an arbitration award is entered can an insured bring an action for breach of the implied covenant of good faith and fair dealing. Practically speaking, to pursue a bad faith action for an uninsured or underinsured motorist claim, an insured needs to obtain an arbitration award for more than the insurance company's best pre-arbitration offer. Because arbitration is required under the policy if an agreement on the value of the claim cannot be reached, and arbitration is a legal process, counsel is often retained to represent an insured in connection with an uninsured or underinsured claim.
The legal and policy procedures for an uninsured or underinsured motorist claim are unique, and can be complex. If you have an uninsured or underinsured motorist claim, and would like to discuss any issue relating to it, please call or email for a consultation.