Los Angeles Uninsured Motorist Attorney Barry P. Goldberg is concerned that most insureds and many personal injury lawyers do not understand some of the unfair anomalies created when accident victims with excellent Uninsured Motorist Coverage are in multi-car collisions. Often an unfair result is created where the “at fault” party has insurance, but because of a multiplicity of injured claimants, each injured claimant receives a pro-rated amount, rather than the full available policy limit. In such cases, the accident victim not only receives less than he is entitled to from the third party, he loses much, if not all of the benefit of the Uninsured/Underinsured Motorist Coverage he had the foresight to purchase from his own insurer.
Consider the following scenario:
The client is driving his own car and he had purchased $100,000 in Uninsured Motorist Coverage. He is involved in a multi-car accident caused by vehicle which also carries a $100,000 liability policy. The accident results in major injuries and substantial claims, both to the client, and the people in the other involved vehicles. Assume that 5 people were injured and that the only asset of the “at fault” driver is the single liability policy. Also assume that, after pro-rating the damages for each claimant, each claimant is forced to accept $20,000, including the client.
Since the client purchased $100,000 of Uninsured Motorist Coverage to protect himself from uninsured and underinsured motorists, one would logically assume that the client can collect all of his damages, up to an additional $80,000 from his own policy? Not so fast. Since the at-fault vehicle carried a $100,000 liability policy, it is not considered “UNDERINSURED.” Insurance Code §11580.2(p)(2) states;
” ‘Underinsured motor vehicle’ means a motor vehicle that is an insured motor vehicle but insured for an amount that is less than the uninsured motorist limits carried on the motor vehicle of the injured person.”
Because the at-fault party maintained a liability policy that was equal to the amount of the client’s Uninsured Motorist Coverage, it is not considered “underinsured.” Over the years, certain things have been accepted about the Uninsured/Underinsured Motorist Law. Probably, the drafters of the statute did not anticipate the foregoing scenario. Further, the courts have upheld this “plain interpretation” of the statute reasoning that the law was designed to protect drivers from financially irresponsible motorist who either did not purchase liability insurance or purchased too small an amount of insurance. In the foregoing example, the at-fault driver purchased substantial liability insurance—-it just was not enough to cover a very substantial multi-car accident.
The irony, of course, is that the client would have been much better off if the at-fault driver had no liability insurance at all! In that situation, the client would have had the full amount of the$100,000 of Uninsured Motorist Coverage he had the foresight to purchase.
Also, over the years, there have been attempts to modify the Uninsured/Underinsured Motorist laws to allow “stacking” of policies purchased by accident victims by eliminating the “credit” of the at-fault driver’s payment or liability policy amount. This seems to make some logical sense so that a purchaser of Uninsured/Underinsured Motorist gets what he or she actually pays for. Insurers are against “stacking” because it eliminates the “windfall” received by the insurer when the at-fault party has significant liability insurance. It is no surprise that these efforts have been extinguished by the insurance lobby, most recently in 2011.
Los Angeles Uninsured Motorist Attorney Barry P. Goldberg is currently advocating passage of California Assembly Bill AB 862. In fact, he has been contacted by legislative analysts for his comment and input. Mr. Goldberg contends that the Bill is a logical first step in empowering responsible California motorists to be able to adequately insure themselves against the epidemic of uninsured and underinsured drivers in the State of California. In short, the Bill will allow California motorists to purchase “enhanced” Underinsured Motorist Coverage which will actually and predictably protect them and their family when involved in an accident wherein the adverse driver did not have sufficient liability insurance.
The new Bill AB 862 eliminates some of the opposition to the prior attempt by allowing insurers to sell “enhanced” underinsured motorist coverage as an option for an additional premium. In other words, a consumer could buy the cheaper coverage (as it exists today) or could buy the “non set off” version of the coverage. Currently, insurers cannot even offer that “enhanced” coverage due to an oversight in the way the statute was originally and in-artfully drafted. Basically, a consumer could buy the coverage desired and have some predictability about how much coverage they are entitled to in the event of an “underinsured” accident. There is a certain fundamental fairness in allowing a consumer to get the coverage paid for rather than have it eliminated or reduced depending on who happened to cause an accident.
This Bill is not a cure all for California’s broken Financial Responsibility Laws. It is simply a logical and practical first step which begins to acknowledge that the minimum liability limits are outdated and out of step with the costs of modern driving. At least a responsible California motorist should be able to insure against the “underinsured” epidemic caused by the Legislature’s complete failure to address the grossly inadequate minimum limits in the state.
Remarkably, the insurance industry opposes the new Bill. This should raise some red flags for even the most casual observer. Why would insurers not want to sell additional insurance coverage for additional premiums? That’s what they do—-sell insurance. Now, they don’t want to even sell the stuff!
The answer should be obvious—-insurers like the current inadequate coverage scheme and are raking in record profits by having Californians “underinsured.” Insurers like the current “credit” or “set off” and enjoy the profit of selling an Uninsured Motorist Policy for a certain amount, and then possibly walking away or reducing that amount based on the happenstance of who caused the accident or how many vehicles were involved.
As Mr. Goldberg told the legislative analyst, as an advocate for California Motorists injured by uninsured or underinsured drivers, I cannot think of a decent understandable reason why AB 862 should not become the law.
For more information about the article author and attorney Barry Goldberg’s uninsured and underinsured motorist expertise, please visit his web page, Los Angeles Uninsured Motorist Attorney.
For a free consultation, Please call Barry P. Goldberg at (818)222-6994
