Underinsured / Uninsured
As a Detroit auto accident attorney with over 40 years of experience, I have unfortunately had to explain to many new clients that their own auto insurance was inadequate at the time of their car accident. Most people seeking representation from a personal injury lawyer after an accident will tell me that they have “full coverage.” They do not understand that there is no such thing as “full coverage.” Rather, buying car insurance is like ordering off of a menu. You get what you order and pay for.
Let’s start with the basics. Every state, including Michigan, carries its own motor vehicle insurance laws that require automobile owners to carry a minimal, mandatory, liability insurance coverage. Under Michigan law, every motor vehicle is required to carry a minimum of 20/40 in liability coverage. This means, that in the event of an injury due to the negligence of the owner or anyone operating the owner’s vehicle with the owner’s permission, there is coverage up to $20,000 per injured claimant in the accident. If there are two claimants, each could recover up to $20,000 which reflects the $40,000 maximum coverage. In cases where more than two people are injured in the accident, the insurance company will often tender its full $40,000 coverage to the Court so that the Court can help in the determination of how the $40,000 should be allocated amongst the more than two competing injured parties.
Do you see the problem here? When your vehicle is being driven with family members or friends as passengers, everybody inside your car is at risk of being injured by another vehicle’s negligent driver who may be carrying the bare minimum 20/40 coverage mandated by Michigan law. In serious car accidents, 20/40 insurance coverage is woefully inadequate. More importantly, it is known within the insurance industry that approximately 1/3 of the motor vehicles being operated in the State of Michigan are being driven without mandatory insurance coverage in place.
This leads us to a discussion of the first insurance coverage I want to talk about, Uninsured Motorist Protection.Uninsured Motorist Protection
If you are involved in a car accident attributable to the negligence of another driver and that driver and vehicle are not covered by a mandatory insurance policy providing 20/40 coverage, then you are entitled to bring a claim against your own insurance company for a recovery up to the value of the uninsured motorist insurance coverage that you have purchased to protect yourself. If you are carrying $20,000 of uninsured motorist coverage, you or your passengers can recover up to a maximum recovery of $20,000. If you are carrying $500,000 of uninsured protection, then you can collect up to $500,000.
From my perspective, the real problem is that many people buying insurance are only thinking about securing the minimal state mandatory liability requirement. They are not thinking about protecting themselves or their family. On average, the difference in annual premiums between a $20,000/$40,000 liability/uninsured motorist policy and a $100,000/$300,000 liability/uninsured motorist policy is approximately $25-$35 a year per car. On average, the difference in annual premiums between a $20,000/$40,000 liability/uninsured motorist policy and a $250,000/$500,000 liability/uninsured motorist policy is approximately $50-$75 a year per car. To secure $500,000/$1,000,000 in coverage is approximately another $50 annually per car. The bottom line is that you don’t need to spend very much money to buy adequate uninsured motorist protection for yourself, your family and friends who may have occasion to be a driver or passenger in your insured motor vehicle.
Another scenario that I have had to unfortunately deal with hundreds of times in my career is the car accident where my client’s family has suffered a death or catastrophic injury due to a negligent driver covered by a 20/40 policy. It’s time to talk about underinsured coverage.Underinsured Motorist Protection
Underinsured coverage is perhaps the most misunderstood but important coverage you should be purchasing when you buy your automobile insurance policy. It is not a required coverage under the Michigan No Fault Law but it is the coverage that truly protects you and your passengers from a catastrophic injury caused by a vehicle carrying inadequate liability coverage. The first thing you need to understand about underinsured coverage is that you select the amount of underinsured coverage that you want to purchase up to the maximum coverage offered. It will typically line up with the liability coverage you are buying, but not necessarily. You must ask for the coverage.
All insurance companies have standard language in their policies that provide for a credit or “set off” against underinsured coverage limits by the amount of the “limits” recovered from the insurer of the owner/driver that caused the accident. A few examples will be helpful:
You carry underinsured coverage of $100,000. The vehicle that caused the accident carries liability coverage of $20,000 which the carrier voluntarily pays. In this instance, you will be allowed to recover up to $80,000 from your own insurance company after it takes a “set off” of the $20,000 already obtained. Please be aware that most insurance policies require that their own insured secure written permission to settle a claim against the party that caused the accident. This is because the insurance company paying the $20,000 or any other limits amount is going to require the injured party to sign a release of any future claim against the insurance company or it’s insured. That release precludes the injured party’s own insurance company from pursuing a cause of action against the underinsured party who caused the accident. Typically, insurance companies like to do a background investigation or asset search on the owner/operator of the offending vehicle to decide whether there is a realistic chance of collecting from that individual. If there is, they will not want their insured to sign a release of claim.
Another example of inadequate coverage is exactly what happened in one of my recent cases. I was retained to be the personal injury lawyer by the 4 surviving adult children of a father who was killed in a motor vehicle accident caused by the negligence of another driver. The at-fault driver carried $100,000 of liability insurance coverage. Unfortunately, my clients’ father only carried $100,000 of underinsured coverage on his own vehicle. It was easy to collect the $100,000 from the negligent driver’s insurance company as it’s insured driver was blatantly negligent in causing the accident. However, the $100,000 of underinsured coverage carried by their deceased father was subject to a “set off” or credit of the $100,000 liability policy on the negligent vehicle. This meant there was no available underinsured coverage. Had my clients’ father been carrying $500,000 of underinsured coverage, I would have been able to secure another $400,000 in recovery. The death of a loving father is obviously worth more than $500,000.
In my many years of practice as a Detroit car accident lawyer, I have also seen situations where my client secured $100,000 of liability insurance coverage, but only carried $20,000 in uninsured/underinsured coverage. Can you imagine anything more ridiculous than an insurance agent recommending $100,000 of liability coverage while only recommending $20,000 of uninsured/underinsured protection for his own client?
In the course of our lives, we purchase life insurance to protect our spouses and family in the event of untimely death. We may purchase disability insurance or have it offered as a fringe benefit of our employment in order to protect against the loss of income that follows from the onset of a disability. And yet, in the selection and purchase of automobile insurance policies, many individuals fail to recognize the opportunity and need to purchase adequate uninsured and underinsured coverages that will truly protect their family and friends who may, unfortunately, be inside the insured vehicle when a serious accident occurs.
The Michigan No-Fault law does not require insurance companies to offer or sell underinsured coverage. However, purchasing adequate uninsured and underinsured coverages is the course of action that the smart and prudent individual will undertake when purchasing an automobile insurance policy.
I am an experienced auto accident attorney serving Southeast Michigan and beyond, I do not sell insurance. I provide this information because with over 40 years experience helping car accident victims and their families, I know first hand that the time to protect your loved ones is before the accident ever happens.
If you or a loved one is injured in a car accident please call us to help you determine your rights. We are also more than happy to help advise you before an auto accident even happens! Call Feldheim & Wilenkin, PC if you have any questions about purchasing your automobile insurance policies.