Underinsured Motorist Coverage in Multi-victim Car Accidents

One problem that arises in car accidents with multiple victims is that the policy limits in the at-fault driver's insurance policy leaves all the victims with insufficient compensation for their damages. Underinsured motorist coverage may be an option for securing an additional source of compensation for car accident victims.
Underinsured motorist coverage provides protection for you and your family when you are involved in a serious automobile accident, and there is insufficient insurance coverage to compensate the victims of the car accident. This makes underinsured motorist coverage one of the most important coverages you can purchase when you car insurance for your vehicle.

The most common scenario where underinsured motorist coverage comes into play is when you have been seriously injured in a motor vehicle caused by another driver who does not have sufficient liability insurance coverage to compensate you for your damages, and you carry a higher underinsured motorist coverage policy limit on your own car insurance policy. As an illustration, if you carry underinsured motorist coverage on your policy with a single limit of policy limits of $250,000 per accident and are involved in a car accident with a driver who is at fault for the accident and carries automobile liability insurance coverage of $50,000 per person and $100,000 per accident and you sustain $80,000 in damages, the liability insurer for other driver would pay its $50,000 policy limits and your underinsured motorist insurance carrier would pay you another $30,000 on your underinsured motorist claim. In the end, you receive full compensation for your damages from the car accident. You suffered $80,000 in damages and received $50,000 from the at-fault driver’s insurance carrier and $30,000 from underinsured motorist coverage, for a total of $80,000.

Most people are unaware that underinsured motorist coverage applies not just in the above-described scenario, but also when the liability policy limits for the at-fault driver are exhausted by payment of other claims, but you have not been fully compensated. The most common situation when this happens is when there is a motor vehicle accident where several people are injured and are all making claims on the same liability insurance policy. In that situation, if the liability limits are exhausted and you have not been fully compensated, you can pursue an underinsured motorist claim through your own policy to ensure that your damages are paid in full.

A case example from our practice illustrates this points:

Our client was a passenger in a Chicago taxi, which must by law carry insurance coverage with a $350,000 single limit policy. Our client carried underinsured limits of $50,000 per person and $100,000 per accident on his personal auto insurance policy with State Farm. Many consumers (and many lawyers) would think there could never be an underinsured motorist claim because the policy limits on the cab’s liability policy was higher than the limits on the underinsured motorist limits on the client’s policy.

The cab turned left in front of a motorcycle, causing the driver of the motorcycle to lose his leg and the passenger on the motorcycle suffered spinal injuries. The injuries suffered by the people on the motorcycle would have each justified payment of the cab’s policy limits. The client, who was sitting in the back seat of the cab when the accident happened, was thrown forward against the bulletproof partition dividing the front and back of the taxi and suffered dental injuries. Neither the driver of the motorcycle nor his passenger carried any UIM coverage on any of their vehicles.

Our client settled with the insurer for the taxi for $500, allowing the motorcycle driver and his passenger to divide the balance of the liability coverage for the taxi. We next made an underinsured motorist claim on the client’s policy with State Farm. Our theory that the client was not fully compensated for the injuries from the taxi-motorcycle accident, despite the fact that the taxi’s policy limits had been exhausted by payment of claims. State Farm agreed and paid the client additional money to settle the underinsured motorist claim. This resulted in the client being fully compensated for the injuries he suffered, even though the number of people injured and the severity of the injuries were so extensive that there was not enough coverage to fully compensate all of the victims of the taxi accident.

In the event of a multi-victim accident where there is insufficient insurance coverage to fully compensate all of the victims of the accident, we recommends that accident victims look to their underinsured motorist coverage to help ensure that they are fully compensated for their injuries.