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Basics of Underinsured Motorist Insurance

October 29, 2010 -

If you drive in California, you are required to have at least $15,000 in liability insurance. You may also have, but are not required to have, uninsured and underinsured motorist coverage. If you drive in Oakland, I strongly advise you to carry both liability coverage and uninsured/underinsured motorist coverage.

The cost to add these two coverages to your policy is relatively low - especially when you consider what may happen if you do not have them. if you are injured in an accident, and the other driver has no insurance, you're out of luck - unless you have uninsured motorist coverage. Underinsured motorist coverage is intended to protect you if the other driver has insurance, but it is not sufficient to cover your damages. Here are the basics of underinsured motorist coverage:

  1. If the damages you suffer exceed the value of the other drivers liability policy your underinsured motorist protection may come into play.
  2. However, your underinsured coverage only applies if it is more valuable than the liability policy of the other party.
  3. You need not be in your car at the time of the accident. Even if you are a pedestrian and you are injured your underinsured motorist coverage should apply.
  4. However, your insurer is not obligated to pay you anything until you have used up ( or "exhausted" as it is called) the responsible parties liability policy.
  5. Once you have used up the responsible parties liability policy, you may claim against your underinsured motorist policy.
  6. When determining whether the other party is "underinsured," only automobile liability insurance is considered. So if the other driver has some other type of insurance policy, it is irrelevant to determining whether he or she is "underinsured."
  7. your insurer entitled to a credit for the money you have received from the responsible party. So the most insurer will pay on your underinsured motorist claim is the underinsured policy limits, minus any payments received from the responsible party.

So here is an example:

Victim is injured in an car accident. His claim is worth $400,000. The responsible party has the minimum $15,000 coverage. Victim has a $100,000 underinsured motorist policy. Once the responsible party has paid the full $15,000 Victim would be entitled to make an underinsured motorist claim. Under this scenario, victims insurer would pay him $85,000.

Note that Victim collects at most $85,000, even though his claim is worth $400,000, and he has a $100,000 underinsured motorist policy. Recall that the insurer is entitled to a credit for the $15,000 paid by the responsible party.

In most cases, you have to actually fight with your insurance company to get what you are entitled to. Most cases do not involve damages which are clearly in excess of the underinsured motorist policy. This means that your insurer will likely be willing to pay something, but that you will have to fight to get what you deserve. Before attempting to settle a claim like this on your own, you should first contact an Oakland personal injury lawyer.

Pete Clancy is an Oakland personal injury attorney. He can be reached at 925-835-7500, or by e-mail ([email protected]).