Typical UM/UIM Claim Issues
Who is covered? There has been considerable litigation regarding whether or not the claimant is an insured under the insurance policy; whether the accident arose out of the use and operation of the vehicle; whether the injuries arose out of an intentional or criminal act which was not covered under the insurance policy.
Priority: Where there is more than one insurance policy with UM/SUM coverage triggered, there may be issues as to which insurance policy pays first, particularly where the insurance policies are underwritten in different states.
Scope of Coverage: There may be issues regarding the amount of coverage provided where the accident takes place outside the state where the insured resides, in another state or country.
Other Coverage: There are frequent disputes over whether the “at-fault” driver had liability insurance coverage which his or her insurer improperly cancelled or improperly disclaimed. There may be litigation to establish that the “at-fault” driver’s insurance must pay, thereby eliminating or at least reducing the amount of money to be paid by the UM/UIM insurer.
Reduction in Coverage: Where the wrongdoer’s liability insurer has made payment under the wrongdoer’s insurance policy, this often reduces the available coverage limits under UM/UIM.
Cooperation and Failure to Comply with Insurance Policy Conditions: The Claimant or his or her attorney may resist disclosure of records to verify lost wages, disclosure of medical records to verify the cause and extent of injuries. The claimant may resist disclosure of information for fear that such disclosure will hurt the claim. However, there is great risk in such obstruction by or on behalf of the claimant, as all UM/UIM coverage endorsements contain conditions requiring cooperation. The failure of claimant to comply with insurance policy provisions may result in a claim being dismissed, regardless of the merits of the claim. For example, some jurisdictions require certain steps to be taken before settlement with the “at-fault” driver, so as not to interfere with the insurance carrier’s subrogation rights. The failure to comply with policy conditions may result in a valid disclaimer of coverage which will be upheld by the Courts.
Stacking and Triggers: Where there is more than one insurance policy triggered with UM/UIM coverage, depending on the State and the particular policy provisions, UM/UIM coverages may stack on top of other SUM coverages; other coverages are reduced by the existence of other coverages due to “non-stacking” provisions. In most states, the full underlying policy limits must be offered to trigger the UM/UIM limits. In some states, even if the full policy limit of the “at-fault” driver is not offered, the claimant may proceed regarding UIM limits, if the claimant is willing to absorb the gap in settlement funds between the amount the underlying carrier is offering in settlement and the UIM coverage above the underlying policy limits.
Liens: When the claimant has received other benefits relating to the accident, such as Medicare, Medicaid or private health insurance, this has potential to affect UM/UIM claims and the receipt of other benefits must be taken into account in analyzing these claims.
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