Pennsylvania Underinsured Motorist Coverage
Underinsured motorist (UIM) coverage is an optional coverage that Pennsylvania drivers may purchase when purchasing and/or renewing their auto insurance policy. UIM coverage protects the insured and occupants in his vehicle who are injured due to the negligence of another driver. These benefits only apply if the liability insurance of the negligent driver who caused an accident has been exhausted and it is not sufficient to fully compensate the injured party for his damages. For example, let’s assume that Mr. Jones was injured in an auto accident caused by Mr. Smith. Mr. Smith’s liability coverage is $50,000 and his auto insurance carrier offered to pay the $50,000 limit to Mr. Jones to compensate him for his injuries and damages. However, Mr. Jones suffered a broken leg and a broken arm, he has undergone two surgeries, he’ll never be able to return to his job as a carpenter, and he has outstanding medical bills in excess of $20,000. Obviously, Mr. Smith’s insurer’s settlement offer of $50,000 is not sufficient to fully compensate Mr. Jones for all of his losses. Under these circumstances, because Mr. Smith’s available insurance has been exhausted, Mr. Jones may now present a claim for UIM benefits to his own insurance carrier to compensate him for the remaining damages he sustained in the accident.
Do I Need Underinsured Motorists Insurance?
As is evident from the above example, the availability of significant UIM benefits is extremely important when someone is seriously injured in a motor vehicle accident. Without UIM benefits, a seriously injured auto accident victim may be limited to a very nominal recovery from the negligent party’s insurance carrier because the average person is otherwise judgment proof beyond his insurance coverage. For this reason, Pennsylvania drivers should never waive UIM coverage on their auto policy. Additionally, everyone should maintain a sufficient level of UIM benefits on their own auto policies to fully compensate them in the event they are injured in an auto accident.
An issue regarding UIM coverage often arises when a person is injured in an auto accident while an occupant (driver or passenger) of a vehicle owned by his employer. Employers that own several vehicles typically purchase what are known as “fleet policies.” These policies insure numerous vehicles owned by the employer. What makes these policies unique is that the UIM coverage afforded to the “named insureds” on the policy (usually the owner of the company and his immediate family members) is substantially higher than the UIM coverage afforded to persons not specifically listed on the policy as “named insureds”. The reason the UIM coverage for “named insured” is substantially higher than for others is because the UIM coverage is deemed “stacked” only for the named insureds. Stacking means the stated UIM coverage in the policy (usually $35,000) is multiplied by the number of vehicles insured on the policy. For example, if the policy insured 20 fleet vehicles and the injured party making a claim was a named insured, the UIM coverage would amount to $700,000. However, if the injured party making the claim was not a named insured and he was just an employee of the company, the UIM coverage would be limited to $35,000. Obviously, for a seriously injured employee who recovered limited insurance from the responsible driver, $35,000 in UIM coverage would do very little to compensate him for his losses.
What Employees Need to Know About Underinsured Motorist Coverage
Employer “fleet policies” with limited UIM coverage for employees are common with police departments, ambulance companies, delivery companies, and other entities that utilize multiple employee-driven vehicles in their business. If you are a regular driver and/or occupant of an employer- owned vehicle, the only way to ensure that there will be sufficient UIM coverage to compensate you in the event you sustain serious injuries/damages in a motor vehicle accident is to purchase significant UIM coverage limits on your own auto insurance policy as the UIM insurance on your employer’s policy is likely limited to $35,000. If you were seriously injured in a motor vehicle accident and you are unsure of your rights, contact Dougherty, Leventhal & Price, LLP for a free consultation with an attorney as soon as possible.