Uninsured and Underinsurance Motorist Coverage
Unfortunately, it is not uncommon to be involved in an auto accident where the other driver has either no insurance coverage or insurance coverage that is so low that you will not be properly compensated. The State of California only requires that drivers have $15,000 in policy limits for bodily injuries and property damage. The policy limits determine how much money the insurance company has to pay you.
So what do people do if they are involved in a serious accident and the other driver has either no coverage at all or only has the bare minimum $15,000 in coverage? Well, you can purchase uninsured and underinsurance motorist coverage.
What Is Uninsured Coverage?
Uninsured motorist coverage provides you with insurance coverage where you are in an accident with a driver who does not have any insurance to cover your accident and the other drive is at fault for the accident. If you purchased uninsured motorist coverage, your insurance company may pay for your injuries as well as any person in your car where the other drive is at fault.
Hypothetical 1
For example, let’s assume that the other drive is negligent and hits your vehicle. Your $30,000 vehicle is totaled and you need shoulder surgery, which is going to cost you $40,000. The other driver has no insurance and is at fault for the accident. Under your auto insurance plan, you have uninsured motorist coverage of $100,000 for property damage and $100,000 for bodily injuries. Since you are paying for that added coverage, you will have sufficient coverage to replace or fix your $30,000 vehicle and to pay for you $40,000 surgery.
Hypothetical 2
Now let’s assume that the other drive is negligent and hits your vehicle. Your $30,000 vehicle is totaled and you need shoulder surgery, which is going to cost you $40,000. The other driver has no insurance and is at fault for the accident. This time, you have no uninsured motorist coverage for either property damage or bodily injuries. Your insurance company might possibly pay to replace or fix your vehicle but they will certainly not be contributing any money toward your $40,000 shoulder surgery. Now you are left burdened with a $40,000 hospital bill because the other driver was driving illegally without any insurance coverage. Unless the other driver has other assets, you will be left with the bill. This situation can create a real nightmare for people who have serious injuries and find out that they are the one who have to pay for it when they were the innocent victim in the first place. Life can be very unfair at times.
What Is Underinsurance Coverage?
Underinsurance coverage provides you with insurance coverage where you are in an accident with a driver who has some insurance but not enough to cover your injuries. The other driver must also be at fault for the accident. For most insurance companies, if you pay for uninsured motorist coverage, you automatically get underinsurance coverage too.
Hypothetical 1
Let’s assume that the other drive is negligent and hits your vehicle. Your $30,000 vehicle is totaled and you need shoulder surgery, which is going to cost you $40,000. The other driver has $15,000 in coverage for property damage and $15,000 for bodily injuries. Under your auto insurance plan, your underinsurance motorist coverage of $100,000 for property damage and $100,000 for bodily injuries. Since you are paying for that added coverage, you will have sufficient coverage to replace or fix your $30,000 vehicle and to pay for you $40,000 surgery.
The way the underinsurance coverage works is you have to first obtain the policy limits from the other drive first before you can tap into your own insurance. In the scenario above, you will need to have the other driver’s insurance company pay you $15,000 toward your property damage and another $15,000 toward your bodily injuries. Once you max out the policy limits, your insurance carrier will get a credit on the amounts paid from the other driver.
For example, your insurance company will get a $15,000 credit toward your $30,000 vehicle ($15,000 paid from the other driver’s insurance). That means that your insurance company will then have to pay the rest of the bill and pay for the other $15,000 in property damage. Since you paid for $100,000 in property damage coverage, you have plenty of coverage for your vehicle.
As for the bodily injury, your insurance company will get a $15,000 credit toward your $40,000 shoulder surgery. Your insurance company could then pay the rest of the claim ($40,000 – $15,000 = $25,000). Since you paid for $100,000 in bodily injury coverage, you have plenty of coverage for your shoulder treatment.
Now you will need to have a skilled personal injury attorney negotiating on your behalf to maximize the policy limits whether you are dealing with the other driver’s insurance carrier or your own insurance carrier. The Law Offices of Michael C. Murphy will aggressively fight the insurance companies to pay up their policy limits to provide you with the compensation that you deserve.
Third-Party Liability Insurance?
What if your shoulder surgery costs $150,000? Under the same scenario above, the underinsurance coverage is maxed at $100,000. The law says that your insurance company only has to pay up to the policy limits and is entitled to a credit on the amount the other driver’s insurance pays to you. As a result, $15,000 would be contributed from the other driver’s insurance and your insurance would contribute $85,000 for a total of $100,000.
Who has to pay the difference to make up for the remaining $50,000 in medical bills? You would have to check with the Law Offices of Michael C. Murphy to see if anyone else might be responsible for paying the remainder of your medical bills. If the other driver was working on the clock at his or her job, then you might have a claim against the employer to contribute some money.
Sadly, if there is no other insurance coverage and no one else to blame, you will be left paying the rest of the bill. This is exactly why it is so important to pay for enough bodily injury coverage. You do not want to take the gamble on the road not knowing whether other drivers have any insurance or only the bare minimum amount of insurance.
Call the Law Offices of Michael C. Murphy
If you need a car accident lawyer or a motorcycle accident lawyer, we can help you. Our personal injury attorneys here at the Law Offices of Michael C. Murphy will know how to navigate through your case and work tirelessly to obtain the best possible recovery for you. Please contact the Law Offices of Michael C. Murphy today at 818-558-3718 or email us at info@murphlaw.net.