When Do I Have an Underinsured Motorist Claim, and How Do I Pursue It?
July 30, 2020
Underinsured motorist coverage protects insured accident victims against negligent drivers who are insured, however their auto insurance policy limits are insufficient to cover the plaintiff’s damages. Consider the following typical scenario: Assume that Defendant Don with minimal $25,000 policy limits severely injures Plaintiff Patrick, who has UM/UIM motorist limits of $100,000. As a result of the accident, Patrick suffers serious injuries and incurs medical expenses/damages in the amount of $100,000.00. Don is underinsured because his bodily injury coverage is less than the total amount of uninsured motorist coverage afforded to Patrick. Said differently, the defendant is said to be underinsured by $75,000 (the difference between the Plaintiff ’s UM/UIM coverage of $100,000 and the Defendant’s $25,000 liability coverage). According to these facts, you potentially have a UIM claim against your clients automobile insurer.
When automobile liability insurance carriers tender their limits of liability on a claim where there is a potential for underinsured coverage (UIM), they may forward a “Full Release” to the Plaintiff’s attorney or to an individual Plaintiff. This type of release can be problematic, specifically when the language of the document purports to release the tortfeasor (the at-fault driver) “of any and all claims” It is our experience that this happens quite frequently, even when the liability carrier has been informed that the Plaintiff intends to pursue an underinsured motorist claim. So how do you properly settle a claim with the liability insurer, while preserving your client’s rights to additional UIM benefits? Guidance can be found in Va. Code § 38.2-2206.
Secure a policy limits offer from the liability insurer to avoid prejudicing the rights of any other UIM carrier.
“Upon settlement with the liability insurer, the injured party or personal representative shall proceed to execute a full release in favor of the underinsured motorist's liability insurer and its insured and finalize the proposed settlement without prejudice to any underinsured motorist benefits or claim.” See Va. Code § 38.2-2206(K).
Any Release should be executed pursuant to Subsection K, which states, “[a]ny such release that states that it is being executed pursuant to or consistent with this subsection shall not operate to release any parties other than the liability insurer and underinsured motorist, regardless of the identities of the released parties set forth in the release, and any terms contained in the release that are inconsistent with, or in violation of, this section are null and void.” Therefore, any artful attempts by adjusters or defense lawyers to broaden the scope of the release are precluded by the revised statutory language.
Although for the benefit of the tortfeasor, the Release must be signed by both the injured person or his personal representative and the underinsured motorist, and shall also contain the statutory notice provided in Subsection L, which must be initialed by the underinsured motorist. But take note, at the end of Subsection L, provides for a certified mailing option, stating that “In the alternative to having the underinsured motorist sign the release and initial the notice, the liability insurer may send the notice and release to the underinsured motorist by certified mail return receipt requested to his last known address, which will be deemed to have satisfied the requirements of this subsection.” This alternative can streamline the process when the tortfeasor is unresponsive.
This notice to the defendant explains that by consenting to the settlement with the plaintiff, the defendant is receiving a full release from the plaintiff and that no judgment can ever be entered against him by the plaintiff arising out of the subject accident. Also, “under this manner of settlement, the underinsured motorist benefits insurer(s) that is/are involved in this case has/have no right of subrogation against the tortfeasor unless they fail to reasonably cooperate in its/their defense of the claim.”
In addition to Va. Code § 38.2-2206(K), an additional statute was enacted which further addressed the right of subrogation of the UIM carrier. Va. Code § 8.01-66.1:1 adds a qualifier to the subrogation provisions and states that the UIM carrier shall have no right of subrogation against a defendant/tortfeasor released pursuant to § 38.2-2206(K), “unless the underinsured motorist failed to reasonably cooperate in the defense of any lawsuit against him.”
If you have followed the foregoing provisions, and obtained a properly worded Release, then you can now feel confident and allow your client to sign the Liability Release provided from the underinsured’s liability carrier, while preserving your client’s right to pursue a settlement or action against any additional underinsured motorist carriers.
If you are involved in a car accident, as a driver or a passenger, it is imperative that you consult with a dedicated and experienced attorney. Call the Alexandria Injury Attorney, Blaszkow Legal, and we will fight to maximize your recovery.
By: Daniel Szieber, Esq.