Ask a Lawyer - Underinsured Motorist Coverage

My wife was in a horrible car wreck on Smith Lake Dam Road.  The man who caused the wreck’s insurance company is hinting they have small policy.  The adjuster says “minimal.”  I am not sure what he means but my wife has over $80,000 in medical bills.  She has missed 6 months of work.  Am I going to get stuck with a lot of unpaid bills that our health insurance won’t cover?  

Paul L., Jasper

Alabama law only requires that a person carry $25,000 in liability insurance.  That is probably what the adjuster means by “minimal” coverage.

Fortunately, there may be other insurance coverage available to cover your damages.

Underinsured motorist ("UIM") insurance allows a person’s own insurance policy to cover damages above the at fault driver’s coverage limits.  This happens when the person causing the injuries does not have enough insurance to cover all your wife’s damages.

The original party who caused the accident will be the defendant, but your own insurance will pay, by verdict or settlement, anything above the coverage amount of the at fault driver.  This happens when your wife’s damages exceed those minimal limits. Her damages will include past and future medical bills, past and future lost wages, pain, suffering, and mental anguish. In the event of a trial, the jury cannot be told that either of the parties even have insurance. That is true for both the liability coverage for the at fault party and your very own Underinsured Motorist coverage that you paid for to cover any excess damages.

At Nelson, Bryan and Jones, we often see at fault drivers who carry only the state minimum of $25,000 while our clients wisely bought plenty of UIM coverage. In a catastrophic accident, BOTH the at fault person's coverage AND our own UIM coverage will be available, even though a jury cannot be told about either.

In Alabama, underinsured (and uninsured) motorist coverage is automatically included in your general car insurance policy unless you specifically reject it.  Alabama law requires that you can only reject UIM coverage in writing and if coverage has not been rejected according to state law procedures, you will automatically have that coverage.

How Much Can Be Recovered?

Although the policy limits usually define how much in underinsured motorist benefits an insured can be paid, there are several things that can increase those amounts.

If you have insurance coverage for more than one vehicle with the same company, you can use the UIM coverage from each policy to “stack” coverage to recover damages from one incident.  For example, you have two cars that Company X insures and you're in an accident with an underinsured driver and you have damages of $500,000 above the other driver’s coverage. Even if each policy contains coverage for only $250,000, you can “Stack” the UIM coverage from both cars covered under the policies to cover the full $500,000 in damages.

UIM insurance is relatively inexpensive. Call today and ask your local agent for full coverage.