Uninsured Motorist Insurance Coverage
What is uninsured motorist coverage?
Uninsured Motorist coverage is considered “first party” insurance. Like health, or perhaps disability insurance, it is your insurance. You pay the premiums You have a policy with your insurance company. Your insurance company owes you some duties of fair dealing. And, if a loss happens, you can look to your insurance to make you whole, to compensate you for your losses. This is contrasted with liability insurance, which is sometimes called third-party coverage. When a loss happens, you look to the liability coverage for the at-fault party for your recovery. Uninsured Motorist comes into play when the at-fault party has no liability insurance -or not enough coverage.
What is the difference between uninsured motorist coverage and underinsured motorist coverage?
Because of the way Maryland law defines uninsured coverage, two situations are encompassed by the protection. The first is where an at-fault driver lacks any liability insurance at all. This is an uninsured situation. The second is where the at-fault party has some insurance, but the amount available is simply not enough to compensate the injured party. This is a somewhat common situation in Maryland, where the law requires only 30,000 in liability coverage. Some states require no liability coverage at all.
What are the policy limits for uninsured motorist coverage?
Maryland requires that you have it and that you have at least 30,000 of this coverage. You can elect not to have the coverage, but you must waive the requirement in writing. You can also purchase more than 30,000 if you choose to, but it cannot exceed your liability coverage.
How does uninsured motorist coverage work?
By definition, straight uninsured motorist coverage comes in to play only when the limits of all available coverages are exhausted and applies only in excess of the underlying limits. Note that Maryland has recently begun to offer "enhanced underinsured" coverage, discussed below, which offers additional coverage.
In an uninsured situation, that is easy as there is no underlying insurance. The full amount of available Uninsured Motorist coverage would be in play. It’s a little more complex in an underinsured motorist situation. Let’s say an at-fault driver has a typical 30,000 policy, and the injured person also has a fairly typical Uninsured Motorist coverage of 30,000. If the injured person recovers the full 30,000 in liability coverage but believes it is not enough to fully compensate him, or her, is there the potential for a recovery from the 30,000 straight uninsured motorist coverage? Although a lot of people assume the answer is yes, there actually is no possibility of additional recovery in this scenario. As the amount of coverage available is reduced by the recovery from the liability carrier, in this instance the uninsured coverage must be greater than the underlying tort policy to come into play. For an additional example, let’s say in our scenario that injured person had 60,000 uninsured coverage, as opposed to 30,000. If the injured person recovers the full 30,000 in liability coverage and believes it is not enough to fully compensate him, or her, in that instance there would be an additional 30,000 pool of potentially available straight uninsured coverage.
Maryland has recently enacted provisions allowing an individual to purchase "enhanced underinsured" coverage for polices written after July 1 of 2018. If an injured person has opted to purchase this expanded coverage, there is no reduction for the amount recovered from an at-fault party. Let’s go back to the first scenario, where an injured person has a typical 30,000 policy, and the injured person also has opted for "enhanced underinsured" coverage, rather than garden-variety uninsured motorist coverage, of 30,000. If the injured person recovers the full 30,000 in liability coverage but believes it is not enough to fully compensate him, or her, is there the potential for a recovery from the 30,000 "enhanced" underinsured motorist coverage? As there is no reduction there for the amount recovered from the at-fault party, the answer is now "yes", there is the possibility of recovering an additional $30,000 from "enhanced" underinsured motorist coverage.
How do I claim uninsured motorist benefits?
The starting point is always the exhaustion of the underlying liability policy. What this typically means is that the offers to surrender the policy limits of the involved insurance, so long as the at-fault driver is released from personal liability beyond the limits of the policy. Your uninsured carrier then has two options. They can agree that you accept the offer and release the other driver, or pay you the amount of the offer. If they choose the latter course, they preserve their rights to make a claim for what is called subrogation against the at-fault driver.
-This Article was updated by Eric Kirk on 7/1/18.