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Thursday, November 26, 2020

Uninsured and Underinsurance Coverage in Automobile Accidents

In Massachusetts, it is essential that individuals obtain sufficient insurance coverage in the event that they are injured in an accident caused by an uninsured or underinsured driver.  Specifically, under a standard auto insurance policy, Uninsured (UM) and Underinsurance (UIM) coverage provide the named insured as well as household members, operators, and passengers of an insured motor vehicle benefits in the event they are involved in an automobile accident with a driver that causes the accident but has no bodily injury insurance coverage or not enough insurance to cover your damages.  

In Massachusetts, it is mandatory for an insured to have limits of at least twenty thousand dollars ($20,000.00) per person and forty thousand dollars ($40,000.00) per accident for uninsured coverage.  What time means is that if you are hit with an uninsured or a “hit and run” driver, the most that you could recover for bodily injury, including medical expenses and lost wages, is twenty thousand dollars $20,000.00 (or more than one person is injured, not more than a total of forty thousand dollars ($40,000)). 

Although underinsurance coverage is optional, many insurers will provide minimal underinsurance coverage of $20,000.00/$40,000.00.  While this sounds nice of the insurance companies, this amount of underinsurance coverage effectively provides no coverage at all.   Why is this?  Since you are only entitled to recover that amount of underinsurance coverage to the extent that your underinsurance limits exceed the bodily injury liability limits of the individual at fault for the accident, your underinsurance limits are almost certainly cancelled out by the bodily injury coverage available. 

Any Bodily Injury recovery received is subtracted from the limit available under your underinsurance coverage and you can never recover more than the limit of your underinsurance coverage.  So how can your underinsurance coverage provide you with no benefits?  Let’s say you are hit by a car with $50,000/$100,000 in bodily injury coverage.  Your medical bills total $70,000.00.  Your insurance coverage provides you with $20,000.00/$40,000.00 in underinsurance coverage.  You may think you have exactly what you need, but because you have more bodily injury coverage available than you do underinsurance coverage, then you cannot utilize your underinsurance coverage.  Under the same example, if you have $100,000/$300,000.00 in underinsurance, you would have an additional $50,000.00 available to you for recovery (your $100,000.00 UIM insurance minus the $50,000.00 BI insurance of the other driver).

As a final example, if your underinsurance coverage is $100,000/$300,000 and the underinsured driver carries a $25,000/$50,000 policy, after you have recovered BI limits of $25,000.00 (assuming that is what the at fault driver carries in coverage), you can recover under your underinsurance coverage up to another $75,000.00.

In Massachusetts you cannot stack the limits of uninsured or underinsured coverage.  This means that only one applicable uninsured or underinsured coverage will be available to cover the loss, so that it is important that you have enough insurance on each of your vehicles.  It is very important to know the cost of increasing your underinsurance coverage from the typical minimal of $20,000/$40,000 to something like $250,000/$500,000 may be less than $10.00 per year.  It is worth the call to your insurance carrier or broker to up these limits because if you are involved in an accident without the proper coverage, it will be too late to do anything.

Finally, there are also requirements specific to uninsured and underinsurance coverage, such as the requirement to provide timely notice to your insurer of an accident (especially in a “hit and run” situation and the requirement to obtain your insurer’s consent to settle with the bodily injury insurance carrier prior to accepting the bodily injury limits in order to pursue recovery under underinsurance coverage.

If you have any questions about personal injury law or uninsured or underinsurance coverage, please feel free to contact the Law Offices of Samuel S. Reidy for a free consultation.

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