Blog Topic

Uninsured Motorist (UM) Claims
Posted by: euser
December 30, 2009

What do you do if you are injured in a car crash, and the other party has no insurance? You can either try to collect from them personally, or you can make an uninsured motorist (UM) claim against your own auto insurance policy. Since I've heard that some 40% of Arizona motorists are uninsured, this coverage is essential. It's relatively cheap and critical if you are injured as a result of the negligence of an uninsured motorist. Since you didn't cause the collision, your rates should not be affected by making such a claim. Your UM coverage will cover all damages caused by the uninsured motorist (medical bills, lost wages, and pain and suffering), but will usually not cover punitive damages, which might have applied if the uninsured motorist was guilty of driving under the influence.

While you are making the claim against your own insurance, you should not assume your own company will give you the benefit of any doubt in evaluating your claim. Typically, the UM carrier is as difficult to deal with in adjusting claims as if you were dealing with the carrier of the responsible party. If you are unable to settle your claim with your UM carrier, you have to look at the policy to determine how to resolve the claim. Historically, UM carriers provided for binding arbitration within the policy to resolve claims. Either one or three arbitrators (usually practicing personal injury lawyers) acted as judge and jury to resolve the claim. However, carriers are increasingly adding direct suit endorsements to their UM policies, which require their policy holders to sue them in Court to resolve the claim. What follows is a real case which I recently resolved, which demonstrates the process of a UM claim.

My client, Fred (not his real name) was seriously injured in a motorcycle collision. He had five surgeries, and his medical bills were over $300,000.00. He had complications with one of the surgeries when a surgical plate broke. He originally came to see me because he was considering a product liability claim against the manufacturer of the plate. However, when I told him we would have to sue not only the manufacturer of the plate, but his surgeon, too, he refused. He really liked his surgeon, and did not want to sue him. (Based on my experience, the manufacturer would claim that the surgeon did not install the plate correctly, which caused it to fracture. In order to counter that defense, the surgeon would need to be a party to the case). Further, since Fred technically rear ended a car in the collision; he did not think he had a case against the driver of the car.

Since Fred was so seriously injured, I wanted to help him. In reviewing his case, I learned that the driver of the car had no insurance, and Fred had $100,000.00 in UM coverage. It wasn't enough to fully compensate him, but it was significant enough to help him financially. I also learned from interviewing the witnesses that Fred was riding behind the car at a safe distance and speed, but the car stopped unexpectedly during a right hand turn, and while attempting the avoid the collision, Fred clipped the left rear of the vehicle. With this evidence, I felt that while the driver of the car wasn't 100% at fault, she did have some fault.

In Arizona, cases are evaluated on the basis of comparative negligence. What this means is that each party responsible for a collision only pays his or her own share. For example, I evaluated Fred's claim as being worth $1,000,000.00. If the driver of the car was 10% at fault, and Fred was 90% at fault, he would still be entitled to 10% of his damages, or in this case, $100,000.00, which was the limit of his UM coverage.

I presented a demand to Fred's UM carrier, demanding the $100,000.00 limit. They refused to make an offer, claiming that Fred was 100% at fault for this collision. Pursuant to the terms of the UM policy, I filed suit against the UM carrier. After filing suit, I reached an agreement with the UM carrier to have the case be decided by binding arbitration, and we agreed on a single arbitrator, and set a hearing date. The arbitrator did not know the amount of insurance coverage involved. At the hearing, each side presented witnesses and evidence.

After the hearing, the arbitrator made his decision: he found Fred's total damages to be $950,000.00, and found Fred to be 60% at fault for the collision, and the uninsured motorist to be 40% at fault, entitling Fred to 40% of the $950,000.00, or $380,000.00. If Fred had purchased that much UM coverage, he would have received that amount. However, he only purchased $100,000.00 in coverage, and the carrier paid that amount. Because the carrier initially refused to pay anything, and for other elements of the carrier's conduct in this case, Fred has the option of filing a bad faith lawsuit against his insurance company for the damages they caused him as result of their handling of this case, but that is another topic for another post.

When your considering buying auto insurance, or reviewing your policy upon renewal, make sure you have enough UM coverage.

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