The limits of liability, that is, the maximum your insurance company promises to pay for your UM claim, is provided in the following wording on our sample fault-based policy:
The limits of liability shown in the Declarations apply, subject to the following:
(1) the limit for “each person” is the maximum limit of our liability for all damages, including consequential damages sustained by other persons, including, but not limited to, loss of services, loss of consortium, wrongful death, and emotional distress, which result from bodily injury sustained by one person in any one occurrence.
(2) subject to the limit for “each person,” the limit for “each accident” is the maximum limit of our liability for bodily injury sustained by two or more persons in any one accident. Regardless of the number of vehicles involved, whether insured or not, persons covered, claims made, premiums paid or the number of premiums shown on the policy, in no event shall the limit of liability for two or more motor vehicles or two or more policies be added together, combined or stacked to determine the limit of insurance coverage available to an insured person.
If a claim is made for bodily injury caused by an underinsured motor vehicle, we will pay only after the limits of bodily injury liability policies applicable to all insured motor vehicles causing the injury have been exhausted by payment of judgments or settlements, and proof of such payment is submitted to us. |
Explanations
These limits address how much your insurance company will pay for any one victim injured in an accident and for multiple victims in an auto accident.
Section (1) caps the dollar amount (as shown on the Declarations page the insurance company will fork over in UM benefits for each injured person in an accident with an uninsured driver. This amount includes all damages, even consequential damages to other people (those suffered indirectly as a result of the accident) by other persons not directly involved the accident. For example, if a man dies in the accident, his wife may make a claim for wrongful death, loss of services, emotional distress, and loss of consortium under the UM coverage of the policy.
Section (2) refers to when there are two or more persons injured in an accident and making UM claims under the policy. Each still may not collect more than the “each person” limit, but together, the most the company will pay out is the amount shown on the declaration sheet for “each accident”. Example: suppose Jane, Bob and Sue are all injured and making UM claims from the same accident, and the limits are 50/100. Even though Jane would be able to collect up to $50,000 for her medical bills and other damages if she, alone, were injured, the company is only responsible for paying up to $100,000 total for all three injured claimants’ bills.
The paragraph following Section (2) basically means that you cannot stack insurance policies to increase the limits available. This means if you have more than one insurance policy or more than one car on your insurance policy, you cannot combine the limits from multiple policies or cars to increase the amount of UM coverage available for one accident.
The last paragraph is referring to an at-fault underinsured motorist, i.e., one that has insufficient insurance to pay for all of your damages. The insurance company requires that all other applicable liability insurance pay your medical bills before your policy’s UIM coverage will kick in. Example: Suppose you are injured in a multicar accident caused by two at-fault drivers. The Honda has 50/100 limits, and the Chevy has only 15/30. To the extent that the driver of the Honda is responsible for the accident, you must settle against that driver as well as the driver of the Chevy, the underinsured motorist, before your policy will fork over any UIM compensation. If your damages are more than what the other policy or policies can pay, you will have a UIM claim with your own insurer.
Reduction of Limits
Your policy limits for UM protection will be reduced if you receive payments from other sources for your bodily injury. Here is what our sample policy says:
When bodily injury is caused by one or more motor vehicles, whether insured, uninsured, or underinsured, our maximum liability shall not exceed the limits of liability stated in the Declarations, less:
(1) any amounts paid or payable to the insured person by or on behalf of any person or organization that may be liable for bodily injury to the insured person; and by,
(2) any payment under the Liability Coverage of this policy; and by
(3) the amount paid and the present value of all amounts payable to or on behalf of the insured person under any workers’ compensation law, exclusive of non-occupational disability benefits.
If an insured person has valid and collectible automobile medical payments insurance available to him or her, the damages which the insured person shall be entitled to recover from the owner or operator of an uninsured motor vehicle shall be reduced for purposes of Coverage D1—Uninsured Motorists Bodily Injury Coverage by the amounts paid or due to be paid under such automobile medical payments insurance. |
Explanations
This section of the UM coverage is the “no-double-dipping” of compensation.
Your insurance company has the right to reduce (setoff) the UM compensation for any payments
(1) you get or are due to collect as a result of your injury in an automobile accident;
(2) any settlement received from those at fault;
(3) any money paid out under this liability policy to someone other than a named insured, such as a relative or passenger;
(4) any workers’ compensation benefits; and
(5) automobile med pay insurance available
Overlapping Liability Insurance Policies (Other Insurance)
This section addresses the issue of when you are covered by multiple policies. The policy wording in our sample fault-based policy is:
With respect to bodily injury to an insured person occupying a motor vehicle not owned by you, the coverage under this Part applies only as excess insurance over any similar insurance available to such insured person and covering such automobile as primary insurance. In this situation, this coverage will apply only in the amount by which the limits of liability for the coverage exceeds the limits of liability of such other insurance.
If there is other similar insurance on a loss covered by this Part, we will pay our proportionate share as our limit of liability bears to the total limits of all applicable similar insurance. But, any insurance for a vehicle you do not own is excess over any applicable similar insurance. |
Explanations
The first paragraph applies to a situation where an insured is riding as a passenger in someone else’s car when hit by an uninsured driver. Suppose your daughter, Veronica, is an insured under your policy. She is riding in her boyfriend, Fred’s car. They have an accident and Veronica is injured. Fred’s own UM insurance for his car would be primary, meaning that his insurance will pay Veronica’s injury-related medical bills first up to his policy limits, and your UM coverage will pony up for the excess.
The second paragraph refers to other “similar” insurance. Let’s say Veronica lives with you (so she’s an insured on your policy), but she also has her own car (which has your name on the ownership certificate, too), and her own insurance policy. Your insurance will pay a proportionate share of Veronica’s injury-related expenses along with her own insurance policy. If Veronica owns her own car and has her own policy, and you have no ownership in her car at all, your policy’s UM coverage would only pay after Veronica’s own UM limits have been exhausted. |
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