UNDERINSURED MOTORIST BENEFITS, PROTECTION AGAINST “Minimum Coverage for Minimum Budgets”
HAVE IT ON ALL YOUR INSURANCE POLICES!
Why should you maximize the underinsured motorist benefits on your auto insurance policy? We have all heard the TV commercials wherein SAFE AUTO INSURANCE COMPANY advertises minimum insurance coverage for minimum budgets. However, do you really understand what this means? Let me translate this for you into “Desmond-ease”, THE AT-FAULT DRIVER HAS MINIMUM MEANS TO PAY FOR YOUR DAMAGES!
Both Kentucky and Indiana law require that a car driver only carry insurance coverage in an amount of $25,000 per person and $50,000 per automobile accident. SO THERE IS NO GUARANTEE THAT THE AT-FAULT DRIVER HAS INSURANCE COVERAGE TO PAY YOUR ALL MEDICAL BILLS, LOST WAGES, OR YOUR CLAIM FOR PAIN AND SUFFERING.
Let’s assume that are driving your antique convertible on Interstate 64 when another driver crosses the centerline and motor vehicle head on. The accident is severe and you are both taken to the trauma center of the University of Louisville Hospital. You undergo surgery for several broken bones and are told you have a closed-head injury. Your spouse is treated and released. You are finally released from the hospital after 10 days and you are told you should not go back to work for four weeks. Further, when you open arrive home from the hospital and open the mailbox, you open a medical bill from U of L Hospital for $43,000. Your car is a total loss as well.
In the upcoming weeks you receive several other bills from the emergency room doctors, the MRI provider, for a CT scan and from the X-ray physicians. In total, your bills come up to over $82,000. To date, your wife has incurred about $14,000 in medical expenses between the emergency room visit, an MRI and continuing chiropractic care. The problem is clear. If the at-fault driver is only insured to the extent required by Kentucky or Indiana law, your medical bills alone exceed that insurance coverage.
In Kentucky and Indiana law allow a person to drive around with $25,000 in insurance, not enough to cover your medical expenses much less the other aspects of your claim. Actually, in this example, your medical bills alone totaled over $82,000. Most insurance policies are sold in $25,000 increments until you get over $100,000 in coverage. As a result, in this example, the at-fault driver was probably underinsured even if he had $100,000 in insurance coverage.
As your attorney, I would be scrambling to find Underinsured motorist coverage on either your car or motorcycle insurance. Once I collect the policy limits from the liability carrier, underinsured motorist coverage allows me to go against your own automobile insurance for whatever damages that were not recovered for. UNDERINSURED MOTORIST COVERAGE TRANSFERS THE RISK THAT THE AT-FAULT DRIVER DOES NOT HAVE ENOUGH INSURANCE COVERAGE TO YOUR OWN INSURANCE COMPANY. So uninsured motorist coverage transfers the risk, to the insurance company, that the other driver was uninsured and underinsured motorist transfers the risk that the at-fault driver did not have enough insurance coverage. Now before going any further, I want you to stop and think for a second. We are in a tough economic time. From merely a logical perspective, people are going to cut back where they can and this may mean they drive their motor vehicle with little or no insurance. Now, ask yourself if you really want to be involved in a motor vehicle accident with such a person.
Underinsured Motorist coverage takes away the risk that the at-fault driver cannot fully pay your claim. It gives me a source from which I can recover, on your behalf, your medical bills, lost wages, future medical expenses and claim for pain and suffering.
Don’t misunderstand me, collecting underinsured motorist coverage is no cakewalk. The underinsured motorist carrier gets credit for the amount you have recovered from the liability coverage as well as the amount they paid in no-fault benefits to you. Nevertheless, it gives you a source to recover your claim from when the at-fault driver does not have enough liability insurance to pay the full value of your claim. If it is not there, we are facing again the possibility that we get a piece of paper, a judgment, that says you are owed money but has little actual value.
YOU CAN’T MAKE AN UNDERINSURED MOTORIST CLAIM WITHOUT COMPLYING WITH THE KENTUCKY OR INDIANA STATUTE.
Also, you can’t make a claim for underinsured motorist coverage without following some procedures laid out in the statutes. In Kentucky, the underinsured motorist statute is KRS 304.39-320 and it says:
304.39-320 Underinsured motorist coverage — Effect of settlement of claims.
(1) As used in this section, “underinsured motorist” means a party with motor vehicle liability insurance coverage in an amount less than a judgment recovered against that party for damages on account of injury due to a motor vehicle accident.
(2) Every insurer shall make available upon request to its insureds underinsured motorist coverage, whereby subject to the terms and conditions of such coverage not inconsistent with this section the insurance company agrees to pay its own insured for such uncompensated damages as he may recover on account of injury due to a motor vehicle accident because the judgment recovered against the owner of the other vehicle exceeds the liability policy limits thereon, to the extent of the underinsurance policy limits on the vehicle of the party recovering.
(3) If an injured person or, in the case of death, the personal representative agrees to settle a claim with a liability insurer and its insured, and the settlement would not fully satisfy the claim for personal injuries or wrongful death so as to create an underinsured motorist claim, then written notice of the proposed settlement must be submitted by certified or registered mail to all underinsured motorist insurers that provide coverage. The underinsured motorist insurer then has a period of thirty (30) days to consent to the settlement or retention of subrogation rights. An injured person, or in the case of death, the personal representative, may agree to settle a claim with a liability insurer and its insured for less than the underinsured motorist’s full liability policy limits. If an underinsured motorist insurer consents to settlement or fails to respond as required by subsection (4) of this section to the settlement request within the thirty (30) day period, the injured party may proceed to execute a full release in favor of the underinsured motorist’s liability insurer and its insured and finalize the proposed settlement without prejudice to any underinsured motorist claim.
(4) If an underinsured motorist insurer chooses to preserve its subrogation rights by refusing to consent to settle, the underinsured motorist insurer must, within thirty (30) days after receipt of the notice of the proposed settlement, pay to the injured party the amount of the written offer from the underinsured motorist’s liability insurer. Thereafter, upon final resolution of the underinsured motorist claim, the underinsured motorist insurer is entitled to seek subrogation against the liability insurer to the extent of its limits of liability insurance, and the underinsured motorist for the amounts paid to the injured party.
(5) The underinsured motorist insurer is entitled to a credit against total damages in the amount of the limits of the underinsured motorist’s liability policies in all cases to which this section applies, even if the settlement with the underinsured motorist under subsection (3) of this section or the payment by the underinsured motorist insurer under subsection (4) of this section is for less than the underinsured motorist’s full liability policy limits. The term “total damages” as used in this section means the full amount of damages determined to have been sustained by the injured party, regardless of the amount of underinsured motorist coverage. Nothing in this section, including any payment or credit under this subsection, reduces or affects the total amount of underinsured motorist coverage available to the injured
In Indiana, the Underinsured Motorist Statute is contained in Indiana Code 27-7-5 and it is too lengthy to reprint here. However, the gist of both the Kentucky and Indiana statute is the underinsured motorist carrier has to consent to any settlement you achieve with the insurance carrier for the at-fault driver or drivers for your to make a personal injury claim for underinsured motorist benefits. Since I think this is confusing, I will give you an example of how this works.
Assume a drunk driver is insured with Safe Auto, hits my client and he only has insurance for the state minimum of $25,000 per person. My client has underinsured motorist coverage of $50,000. When and if Safe Auto agrees to tender their policy limits of $25,000, I have to send my client’s insurance company proof of this offer and proof that the drunk driver did not have more insurance coverage. My client’s insurance company then has to decide if they are going to preserve their right to sue the drunk driver (known as their subrogation rights) by going ahead and paying my client the $25,000 or if they are going to waive their rights and consent to the proposed settlement. If I don’t give my client’s underinsured motorist carrier this opportunity to waive or preserve their subrogation rights, my client’s underinsured motorist claim would be barred and I would have malpracticed his case.
As a result, for both the Indiana and Kentucky, the procedure laid out in the statutes has to be completely followed.
WHAT ABOUT UNDERINSURED MOTORIST AND UNDERINSURED MOTORIST COVERAGE FOR AN AUTMOBILE ACCIDENT IN INDIANA?
Beware Indiana has an offset for underinsured motorist benefits! In other words, you can only recover underinsured motorist benefits to the extent that the other driver has less liability insurance than you have underinsured motorist coverage.
To illustrate, assume the drunk driver has $50,000 of liability coverage and you have a $100,000 policy of underinsured motorist coverage. You can only recover a total of $100,000 between all the parties involved. In other words, the underinsured motorist carrier gets to offset the benefits it owes you by the extent you recovered from the at-fault driver’s insurance company. The liability carrier pays $50,000 and the underinsured motorist carrier pays another $50,000 making your total recovery $100,000. So even though you should be able to recover a total of $150,000 since you purchased a $100,000 underinsured motorist policy, Indiana law only lets you recover a total of $100,000.
Kentucky law is the exact opposite. Kentucky law does not allow for an offset of underinsured motorist benefits. You could recover a total of $150,000, ($50,000 +$100,000) in the above example.
So if your motor vehicle is registered in Indiana, I would suggest you have $250,000 or more of underinsured motorist coverage. This is because I see a fair number of insurance policies from Indiana having liability coverage of $100,000. Well, if the other driver is insured for $100,000 and you have $100,000 of underinsured motorist coverage, you don’t have an underinsured motorist claim. Basically, $100,000 minus $100,000 equals zero. As a result, you can recover $100,000 from the liability carrier and $0 from your own company as underinsured motorist benefits. In Kentucky, it would be the opposite. You could recover $100,000 from the liability coverage and $100,000 from the underinsured motorist carrier for a total of $200,000. By the way, this offset actually applies to uninsured motorist coverage as well. However, since you are probably only going to see this offset for uninsured motorist benefits when there are multiple uninsured motorists policies available, it is not discussed as much.
SO WHAT HAPPENS IF I DRIVE MY CAR OUTSIDE THE STATE IT INSURED IN?
This area of the law is known as Conflicts of Law and it addresses when a court is going to apply its own law versus the law of another state. As a general rule, the answer is that the insurance coverage you buy in your state follows you to other states and that insurance policy is controlled by the law of the state it was issued.
So if you are driving your car home from a vacation and a car wreck happens while you are in Florida, the insurance coverage you purchased in Kentucky still applies for the car wreck that happened in Florida. While Florida law may control the law in regard to the car wreck, Kentucky or Indiana law, in regard to your automobile insurance policy, should still control.
This is a complicated area of the law and I would encourage you to call me if you think your case presents a Conflicts of Law Issue. However, you should know this. Purchase in your home state the insurance coverage you need to protect you and your family and it should follow you to any other state you travel in.
WHAT DOES IT MEAN TO STACK MY UNDERINSURED MOTORIST INSURANCE COVERAGE?
Kentucky law allows stacking of uninsured and underinsured motorist benefits depending upon how the insurance policy is written. Indiana does not allow insurance policies to be stacked.
Simply put, stacking refers to recovering insurance polices from more than one applicable policy. In other words, you own three vehicles: a Chevrolet, an Audi and a Ford Van. On all three of these vehicles, you put $100,000 of underinsured motorist coverage. Stacking means that since you effectively bought three $100,000 policies of underinsured motorist coverage, you have $300,000 of underinsured motorist benefits available to you. Even though you were only in one of your vehicles at the time of the accident, the insurance coverage from the other two policies applies.
Insurance companies have now written most of their insurance policies wherein a single policy of uninsured or underinsured motorist coverage will cover any vehicle you are in. The idea is that they want to prevent stacking. So if have two automobiles but I have one policy of underinsured motorist coverage, my insurance company wrote my insurance coverage in such a way that it would apply no matter which vehicle I am driving. In essence, they made it so I only have one policy of underinsured motorist coverage.
Stacking honestly requires a lawyer to look at the specific automobile policy and the current case law. The point I want you to understand is to never take anything at face value and allow an attorney to look things over before agreeing to walk away from am insurance policy. Very simply, I spoke above about a case wherein we found uninsured motorist coverage on an automobile that was not involved in the motor vehicle accident. I have had a case wherein we made uninsured motorist coverage from an automobile insurance policy apply to a motorcycle wreck. My point being that don’t guess at what kind of insurance coverage you have when a car wreck occurs. We can look over all the insurance policies together and decide which ones apply and which ones don’t. The phone call is free and my phone is (502) 694-1888.
DIVORCED PARENTS AND AUTOMOBILE ACCIDENTS.
I am divorced myself so this issue has a special fondness for me. For divorced parents, I want to digress just for a minute because this issue can also apply to car wrecks or motor vehicle accidents involving scooters. In essence, a good lawyer, when handling serious motor vehicle accident, may have to fish for uninsured and underinsured insurance coverage between different households. Let me explain.
When I first got divorced, my children spent an equal amount of time at my house and my ex-spouse’s home. As a result, my children were covered by my uninsured and underinsured motorist coverage even if they were not in a motor vehicle owned by me when the automobile accident occurred.
My insurance policy is written so that my children, even if they were riding in my ex-spouse’s car, could make a claim for uninsured motorist benefits or uninsured motorist benefits on my automobile insurance. My children qualify as resident relatives of my household. I even sent a letter to my insurance company explaining my interpretation and they agreed with my reasoning and sent me a letter confirming my interpretation.
Take this example and apply it to car wreck. You need to understand that you may have uninsured or underinsured motorist coverage through an automobile insurance policy issued to one of your relatives or someone living in the same household as you. This can be crucially important to investigate for a car accident because the medical bills, without considering your other damages, may exceed the insurance coverage on the at-fault driver. Further, most people don’t know they are supposed to put underinsured motorist coverage on their automobile insurance policy or that they should look for it when a car wreck happens. This is because they suffer from the misconception we discussed herein that the at-fault driver is going to be responsible for your medical bills.
Part of my job as an attorney is to be a Fisherman. I have to know the law well enough to “fish” for other insurance coverage that may apply. The last thing I want to do is walk away from money that could be collected on your behalf.
I previously handled a personal injury claim for a young lady who was a stripper and lost part of her leg in a motorcycle wreck. She was a passenger on the motorcycle and the motorcycle operator had no insurance coverage of any kind. The only way we ultimately recovered anything for her was that we were able to make an argument that she lived part-time with her father and fell under his uninsured motorist coverage as a resident relative of the household. Without this argument, we would have recovered nothing.
On this issue, don’t guess! Let me look into it and see if I can track down other insurance coverage that may apply. This is not a simple issue that can be addressed easily. Let’s make sure it is done right.
Parting Thoughts about Car Accidents and Underinsured Motorist Insurance
I previously handled a personal injury claim for a client that no underinsured motorist coverage available. Before I accepted the settlement offer from the liability carrier, I explained to my client that we had recovered the maximum amount we could recover without suing the at-fault driver and trying to collect against his assets. We had ran an asset search and already determined that the at-fault driver really had no assets to collect a judgment from.
We obtained the policy limits of at-fault driver, and I explained to my client that his case was worth more than we were recovering but, there was no other insurance source from which to recover from. He claimed he understood and authorized me to accept the liability carrier’s offer of their policy limits.
I brought this client into my office to sign the release and receive his check. It was at that time he asked me, after seeing sea television commercial for the Winters and Yonkers, why he was not recovering more. As he explained it, Mark Yonkers was standing by a car with less damage than his client car and yet, holding a check for a greater amount than I had recovered for him. He did not understand why someone with less damage to his car received more than he was recovering. Of course, I explained to him that this was an advertisement and probably not an actual case for the advertising law firm. However, more importantly, I explained that if this had been the most costly attorney in the United States had handled the case himself, he probably would have recovered the same amount that I did for him.
The moral of my story is clear. When it comes to car wrecks and motorcycle crashes, so much of your rights are established before you ever walk into an attorney’s office. We, as attorneys, are limited by the facts of your case, the law and the insurance coverage you purchased before the car wreck happened. This principle applies to all attorneys!
When an automobile accident happens, it is like a photograph is taken. Everything in that photograph stays in that photograph and you can’t add anything to it. For this reason, I hope that you are reading this book before the automobile accident occurred and I hope you are calling your insurance agent today to verify that you have no-fault coverage, med-pay coverage, uninsured motorist coverage and underinsured motorist coverage. Because no matter whom you choose as your legal counsel, you will thank me for this advice as these types of coverage on your automobile or motorcycle insurance, protect you and your family member in the case of a serious car wreck involving permanent injuries.
As I tell all my clients, because my legal practice concentrates on car accidents, I hope you will never have to use me again. But if you do, I am available even if it is to ask a simple question. All my clients have my phone number as it is my way of showing my appreciation for this continuing loyalty.
I wish you and your family all the best and pray that you will never be the victim of a serious car accident.
James “Jim” Desmond
Desmond Law Office, PLLC
Primary offices in Louisville, Kentucky
 Punitive damages can be recovered when a driver is guilty of gross negligence or extreme recklessness. The argument is that a person’s voluntary intoxication qualifies as gross negligence and therefore, justifies an aware of punitive damages. Punitive damages are harder to bankrupt than compensatory damages.
Desmond Law Offices, PLLC, aggressively pursues all avenues of compensation. The automobile accident laws in effect in Kentucky and Indiana are very different, and I understand them both. If you or a loved one is in need of quality legal representation as a result of an car wreck or auto accident, contact me now. The steps you take now can and will affect your case and possible settlement or verdict. I can give you experienced legal advice and protect your rights so that a car crash won’t turn your life upside down.
Still have questions or concerns? Call me now and let’s discuss them. My phone number is (502) 694-1888.
The Kentucky State Bar requires me to say that COURT COSTS AND CASE EXPENSES WILL BE THE RESPONSIBILITY OF THE CLIENT.
The Desmond Law Office is a Louisville, Kentucky personal injury firm that concentrates on motorcycle, trucking, and auto accidents. I offer effective and aggressive legal representation to motor vehicle accident victims and their families. If you’ve been injured in a car, motorcycle or tractor trailer wreck, contact me now, on my phone, at (502) 694-1888.
Call Me On My Phone: (502) 694-1888