By: Virtus Law Group, Birmingham Alabama.
What are Underinsured and Uninsured Motorist Coverage?
Uninsured Motorist coverage pays you for losses resulting from an accident caused by a driver that does not have any insurance. If the person who caused your accident has insurance, but it isn’t enough to cover your losses, then Underinsured Motorist coverage pays you for the remainder of your claim.
Underinsured Motorist (UIM) coverage pays you for injuries and losses when they exceed the policy limit of the person who caused the accident. In order to collect from UIM coverage, you must have an insurance policy that provides this kind of coverage. It isn’t mandatory to have Underinsured Motorist coverage in Alabama, but you must waive UIM coverage in writing when buying insurance if you do not want it, so you likely have it unless you chose to waive the additional coverage. It’s important to remember that UIM coverage is a part of your insurance policy, not the policy of the person who caused the accident.
In Alabama, the minimum required liability coverage drivers must hold is $25k per person per accident, so any damages you incur over $25k may not be within the other driver’s policy limit. When this happens, you and your attorney will need to know how to collect from your UIM carrier in order to get the full amount of your claim.
The First Step: Notifying your Underinsured Motorist Carrier
When you and your attorney assess your losses after an accident, you may find that they exceed the amount of coverage provided under the policy of the person who hit you. Your underinsured motorist coverage comes into play when this happens. If it appears that your losses will exceed the amount available under the at-fault driver’s policy, you must notify your UIM carrier about the possibility that you will file a claim. It is extremely important to promptly notify your insurer of a potential claim, or you may risk losing coverage.
The Second Step: Negotiating a Potential Settlement
After notifying your UIM carrier, you and your attorney can continue to try to resolve your claim with the person who hit you and their insurer. During this process, you may be offered a settlement from the at-fault party. Even if the settlement they offer is for the maximum amount available under their policy and is the most that they are willing to offer, you may not accept this offer without first informing your UIM carrier or you risk losing coverage under your UIM policy.
The Third Step: Your UIM Carrier Investigates and Chooses the Next Steps
After receiving notice of the settlement offer, your UIM carrier will begin investigating your claim to determine how it wants to proceed. Your insurer has a reasonable amount of time (usually 30 days) to conduct its investigation and inform you of what its next steps are. It is important not to finalize any settlements with the at-fault driver before receiving an answer from your UIM carrier.
The Fourth Step: The UIM Carrier Fronts the Settlement Amount or Consents to the Settlement
After completing its investigation, your UIM carrier will inform you how it wants to move forward. Your insurer may tell you one of two things: that they consent to the settlement or that they do not.
Refusing to Consent to Settlement and Fronting the Settlement Amount
If your Underinsured Motorist carrier chooses to refuse the settlement offer, they must then advance, or “front”, the amount of the offered settlement to you. From there, the lawsuit will proceed as if nothing has changed, and you will keep the amount of the settlement offer and any additional amount you are awarded.
Consenting to the Settlement
If your Underinsured Motorist carrier decides to consent to the settlement with the at-fault driver’s insurer, you receive the amount offered in the settlement and then continue with your claim against your insurer. Once the claim against person who hit you is resolved, you are now left with a claim with your insurer for the remainder of the money you are owed. Unlike a claim against the at-fault party in order to establish liability for the accident, this is a contractual claim with your insurer to receive the benefits owed to you under your policy.
Regardless of which option your Underinsured Motorist carrier chooses, collecting under your UIM policy can be confusing and an experienced attorney can help you navigate the process.
Founded in Birmingham, Alabama Virtus Law Group is a Personal Injury and Labor and Employment firm serving the people of Alabama.