Stacking “UIM” Policies to Maximize Your Client’s Recovery
What happens when you are hurt as the result of a car accident, and your injuries are severe, but the tortfeasor (person who caused the injuries) has insufficient insurance coverage? Blaszkow Legal, PLLC can help you find additional coverage to maximize your recovery.
One common way to maximize the amount of available insurance coverage is by “stacking” the amount of underinsured motorist coverage that may be available for a claim. Here is an illustration of a case we have recently litigated (the names have been changed to protect people’s privacy) which at first glance appeared to have only $100,000 in applicable coverage.
Plaintiff Patrick, a pedestrian, was seriously injured when he was struck by a car negligently operated by Defendant Don. At the time of the accident, Don had in effect an automobile liability policy issued by State Farm Insurance Company, with a limit of $100,000 for a single bodily injury claim.
At the time this accident occurred Patrick, Paul (brother), Peter (grandfather), and Priscilla (mother) were all residents of the same household, located in Alexandria, Virginia. Each family member had a separate automobile policy in effect at the time of the accident.
The Policies are as follows:
Patrick’s policy, issued by Elephant, provided $100,000 UIM coverage per injured person;
Paul’s policy, issued by StateFarm, provided $100,000 UIM coverage per injured person;
Peter’s policy, issued by StateFarm, provided $25,000 UIM coverage per injured person; and
Priscilla’s policy, issued by Geico, provided $25,000 UIM coverage per injured person.
I. Stacking of “UIM” Coverage Under Multiple Policies
Patrick was named insured on his own insurance policy, and was also an "insured" because of his status as a relative and resident of the same household under the three additional policies owned by the other members of his family.
Va. Code Sec. 38.2-2206(B) provides in relevant part:
A motor vehicle is "underinsured" when, and to the extent that, the total amount of bodily injury. .. coverage applicable to the operation or use of the motor vehicle and available for payment for such bodily injury or property damage, . . . is less than the total amount of uninsured motorist coverage afforded any person injured as a result of the operation or use of the vehicle.
“Available for payment” means the amount of liability insurance coverage applicable to the claim of the injured person for bodily injury or property damage reduced by the payment of any other claims arising out of the same occurrence.
A motor vehicle is underinsured to the extent that liability coverage on such vehicle is less than the UIM coverage available to the claimant on account of the operation of such vehicle. See Nationwide Mut. Ins. Co. v. Scott, 234 Va. 573, 577, 363 S.E.2d 703, 705 (1988). The clear and unambiguous language of Code Sec. 38.2-2206(B) requires that all the UIM coverage available to Plaintiff Patrick be aggregated, or stacked, before the total amount of this coverage is compared with the total amount of liability coverage available to Defendant Don.
The relevant portion of Code Sec. 38.2-2206(B), set forth above, requires a determination of "the total amount of bodily injury . . . coverage . . . available for payment," which "means the amount of liability insurance coverage applicable to the claim of the injured person for bodily injury." See USAA Casualty Insurance v. Alexander, 248 Va. 185, 192, 445 S.E.2d 145 (1994). In this case, that total amount is the $100,000 available under Defendant Don’s liability policy.
Second, the statute requires the determination of "the total amount of uninsured motorist coverage afforded any person injured as a result of the operation or use of the vehicle." In this case, that total amount is the coverage afforded under all four policies, or $250,000. Once these totals have been calculated, Defendant Don's liability coverage is "less than" the total amount of UIM coverage afforded to Plaintiff Patrick, so that, under the facts of this case, Defendant Don was operating an "underinsured motor vehicle" within the meaning of Code Sec. 38.2-2206(A) and (B).
II. “UIM” with Minimum Limits
The definition contained in Code Sec. 38.2-2206(B) provides that "the extent to which the vehicle is underinsured" is determined not by whether the insured has contracted for higher limits, but by a comparison of the "total amount of uninsured motorist coverage afforded any person" with the total amount of liability insurance available for payment. See USAA Casualty Insurance v. Alexander, (above). Therefore, even though each of the four policies insuring Plaintiff Patrick alone are either equal to or less than Defendant Don’s $100,000 limits, does not preclude them from being “stacked” to determine the total amount of “UIM” coverage.
When, an injured person has purchased only "minimum limits" UIM coverage, but has a "total amount of uninsured motorist coverage afforded" that is greater than the statutory minimum, an insurer shall be deemed obligated to make payment "to the extent the vehicle is underinsured," as defined in Code Sec. 38.2-2206(B).
After stacking the per-person UIM limits of the policies issued to Plaintiff Patrick’s family, in the amounts of $100,000, $100,000, $25,000, and $25,000, Plaintiff Patrick has $250,000 in UIM coverage. Any payments made by State Farm, Defendant Don's liability carrier, will be credited against this amount, pursuant to Code Sec. 38.2-2206(A) and (B).
III. Priority of Payment
Pursuant to Va. Code Sec. 38.2-2206(B), If an injured person is entitled to underinsured motorist coverage under more than one policy, the following order of priority of policies applies and any amount available for payment shall be credited against such policies in the following order of priority:
The policy covering a motor vehicle occupied by the injured person at the time of the accident;
The policy covering a motor vehicle not involved in the accident under which the injured person is a named insured;
The policy covering a motor vehicle not involved in the accident under which the injured person is an insured other than a named insured.
Where there is more than one insurer providing coverage under one of the payment priorities set forth, their liability shall be proportioned as to their respective underinsured motorist coverages.
When applying Va. Code Sec. 38.2-2206(B), since Plaintiff Patrick was a pedestrian at the time of the accident, #1 does not apply. Therefore, we see that Elephant Insurance (The policy covering a motor vehicle not involved in the accident under which the injured person is a named insured) has first priority to receive the statutory credit of $100,000. See #2 above.
Since Elephant Insurance provides Plaintiff Patrick with $100,000 in UIM Coverage, they are given a “credit” for State Farm’s liability payment of $100,000, and have no exposure. Therefore, the $150,000 in UIM coverage is split proportionately between the two remaining State Farm policies and the Geico policy. See #4 above.
If you have been involved an a serious car accident, call Blaszkow Legal, PLLC right away so that we can maximize your recovery!