As expensive as it may be, if you carry collision coverage on your vehicle, you likely have a deductible that you must fork over first before your insurance will kick in and pay anything for repairs. If the other driver is at fault, his or her insurance company covers the repair bills under their liability coverage. If that driver is uninsured, however, some policies provide uninsured motorist coverage for property damage to vehicles. Our sample fault-based policy refers to this section as Coverage D2-Uninsured Motorists Car Damage Coverage. Before we look at the company’s agreement, here are some additional definitions.
Additional Definitions Used in Coverage D2 (Car Damage) Only:
As used in Coverage D2:
(1) “Loss” means damage to your insured car, including its equipment, caused by actual, direct physical contact with an uninsured motor vehicle.
(2) “Uninsured Motor Vehicle” means any motor vehicle:
(a) which is not insured by a property damage liability bond or policy at the time of the accident; or
(b) which is insured by a liability bond or policy at the time of the accident which provides property damage liability limits less than the minimum property damage liability limits required by the Financial Responsibility Law of the state in which your insured car is principally garaged; or
(c) which is insured by a property damage liability bond or policy at the time of the accident but the company denies coverage or is or becomes insolvent within one year of the accident; or
(d) which is used without permission of the owner if there is no property damage liability bond or policy applicable at the time of the accident.
However, a motor vehicle which has at least the minimum property damage liability limits required pursuant to the Financial Responsibility provisions of the Vehicle Code of the State of California shall not be held to be an uninsured motor vehicle even when the property damage liability limits are not sufficient to compensate for all property damage caused by the owner or operator of the vehicle.
“Uninsured Motor Vehicle”, however, does not mean a vehicle, which is:
(a) owned or operated by you or anyone living in the same household in which you live; or
(b) owned or operated by a self-insurer as contemplated by any financial responsibility law, motor carrier law or similar law; or
(c) owned by a governmental unit or agency; or
(d) operated on rails or crawler-treads, or while located for use as a residence and not as a vehicle; or
(e) a farm-type tractor, or any equipment designed for use principally off public roads except while actually upon public roads.
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Explanation
Let’s take a look at what some of these less than self-explanatory definitions mean. For the purposes of UM Car Damage Coverage, a vehicle that is uninsured is one that either has no property damage insurance because none was ever purchased (2)(a), or because the insurance company with which it was insured denied coverage or went belly up within a year of the accident (2)(c), or it has no insurance and was used without permission of the owner (2)(d), or it has insurance, but is considered uninsured because it has less than the state required limits for property damage insurance (2)(b).
The paragraph after the first section of uninsured motor vehicle definitions is an important one. It means that if a vehicle carries a state’s minimum property liability damage insurance and that is not enough to pay for the damage it caused to other vehicles, that does not mean it is considered an uninsured motor vehicle.
The bottom paragraph of definitions talks about what an uninsured motor vehicle is not. The less clear descriptions tell us that it is not a vehicle which you own or drive or is owned or driven by anyone living in your house. For example, if your adult son who lives with you owns a Ford and it is uninsured for property damage and it hits your Honda, you cannot collect benefits under the uninsured motorists car damage section of your policy to take care of the property damage to the Honda.
An uninsured motor vehicle is also not a car owned or driven by someone who self-insures the vehicle. (Self-insurance is when an individual or organization sets aside funds to meet anticipated expenses or claims.) These funds provide benefits directly instead of through the purchasing of coverage from an insurance carrier.
Agreement
should you have an accident caused by an uninsured motorist:
We will pay for loss to your insured car which you are legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, providing a report of accident is made to us by you or someone on your behalf within ten business days following the loss and the owner or operator of the uninsured motor vehicle is identified or the vehicle is identified by its license number.
The car damage must be caused by accident and arise out of the ownership, maintenance or use of the uninsured motor vehicle.
Determination whether you are legally entitled to recover damages or the amount of damages shall be made by agreement between you and us. If no agreement is reached, the decision will, except in Nevada, be made by arbitration.
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Explanation
In our sample fault-based policy, the insurance company agrees to pick up the tab for the damages to your vehicle under the UM Car Damage section of the policy in a car crush that is legally not your fault and caused by an uninsured vehicle. You are required to report the accident to your insurer within 10 business days, plus, you must be able to either identify the driver of the uninsured vehicle or identify the car by its license number. “Legally” means that you are entitled to recover damages; the amount of those damages is settled by agreement between you and the insurance company. If you can’t reach an agreement, it is decided by an arbitrator. |
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