Uninsured and Underinsured Motorist Coverage (UM/UIM) claims can be a complex, technical area of insurance defense. The information contained in this article is necessarily general and is not meant to be used as a definitive source for legal authority or legal advice.
At the beginning, it is important to note that Insurance laws are generally regulated by the individual States. This means that each State has its own laws, rules, regulations and court decisions affecting UM/UIM. As State laws differ, and as the laws are constantly changing, we suggest that you use this information as a starting point, and that local counsel be retained, and legal research be performed if questions are raised regarding particular facts regarding an accident and resulting claim. It is also important to consider the venue of the claim. Some jurisdictions have stringent rules regulating insurers regarding timeliness regarding the handling of claims, particularly with first party coverage. Please check with local counsel if you are unfamiliar with the venue of the claim, and the claims-handling standards that apply.
The insurance policy language is the key starting point of defense in any claim involving insurance. The insurance policy language provides the framework which Courts will look to in resolving claim issues. Insurance carriers have been forced to pay (where they otherwise would not have had to pay) when the UM/UIM policy endorsement has been misprinted, even where the UM/UIM insurance has a standard endorsement within a State. Therefore, it is important that the particular insurance policy endorsement, which provides the coverage, be reviewed at the first notice of the claim, especially where any of its pertinent provisions may be at issue.
The next step is to gather the available facts regarding the accident and claimed injuries as soon as possible. These UM/UIM claims are defended on a "case by case" basis where both the underlying facts and the claimant's compliance with the coverage requirements may determine the ultimate result. Therefore, seek to get all of the facts, read the insurance policy language applying to the claim, and then look at the law of the State where the accident happened and or the law of the State where the policy was issued, if there are any questions.
Purpose of the Coverage
Many states have enacted laws allowing UM/UIM coverages to be underwritten by insurance carriers in order to recompense persons who are injured at the hands of "at-fault" drivers without any insurance coverage ("uninsured" or "UM" coverage) and at the hands of "at-fault" drivers who have limited insurance (are "underinsured"), which would trigger "underinsured coverage" ("UIM"). Given the number of uninsured drivers, added to the number of drivers who only have the minimal financial responsibility coverage limits required in their state, people seriously injured in accidents may not be able to be compensated due to non-existing or limited insurance coverage carried by the "at-fault" driver. Many people now choose to purchase UM/UIM coverages for their own automobile policies, with coverage limits of $1 million or higher, to protect themselves and their families, from the risk of being injured by an inadequately insured driver. Similarly, many businesses want to offer increased protection to their workers. Commercial insurance policies may contain UM/UIM coverages, allowing truck drivers and other workers to be insured at high levels of coverage, usually much higher than these drivers and workers would have under their own personal vehicle's UM/UIM coverage.
The nature of the UM/UIM coverage requires aggressive defense steps to be taken by property and casualty insurers to defend UM/UIM claims, as the best practices in handling these claims are different than those used in the typical automobile claim lawsuit. Many insurers correctly perceive greater risks to underwriting UM/UIM coverage, as their insureds will be making claims against their own insurers for compensation for their injuries and damages. The arbitration process, required by many UM/UIM insurance policy endorsements, has more limited opportunities for discovery than there would be if the claim was prosecuted in a lawsuit in court. Compared to the appeals process in a personal injury lawsuit, there is restricted appellate review of arbitration awards in the event of an adverse determination to the insurance carrier, making it less likely that an unjustified decision will be reversed. In a small number of UM/UIM claims involving lawsuits against UM/UIM insurers, instead of arbitration, there may be extra-contractual or "bad faith" claims asserted, complicating resolution of these claims and increasing defense costs.
- Typical UM/UIM Claim Issues
- Steps to Be Taken After Notice of Claim
- Caution
- Scope of Pre-Arbitration Discovery
- Stays of Arbitration
- The Role of the Arbitrator(s)
- Uninsured Motorist Coverage
- Hit-and-Run Cases
De Novo Review
Some jurisdictions have no right to a new trial if either the claimant or the insurer is unsatisfied with the result at arbitration. It is important to check the rules in the particular venue to determine the best course.
Conclusion
There is no substitute for learning the facts, reading the insurance policy, then applying the law of the applicable venue to the particular facts. Aggressive action to obtain the facts and appropriate discovery are essential to obtain the best result. All UM/UIM claims must be treated as high exposure claims until proven otherwise.
Bob Worden is a member of the firm Lawrence Worden Rainis & Bard, P.C., located in Melville, New York, which focuses on defense of high exposure claims. He has been a frequent lecturer and consultant for national property and casualty insurers regarding Uninsured and Underinsured Motorist claims and other issues regarding defense of high exposure claims.
