California Requires Insurance Carriers to Offer UM / UIM Coverage

In some cases, an attorney may have to go an extra step in securing valid coverage for an accident. Like in life, not every person driving a vehicle is a perfect driver. Some may not have a valid driver's license. Some may not have liability insurance or proof of financial responsibility.  Even though California requires liability insurance with limits of a minimum: $15,000, some drivers disregard the law.

An accident that involves an uninsured driver will result in: (1) a license suspension for the uninsured driver; and (2) trigger coverage for the other driver pursuant to the uninsured motorist provision in the insured's own insurance policy.

Bad news is sometimes given to clients when it is confirmed that they waived their uninsured / underinsured motorist coverage. Thus, they are left with the sole option of pursuing damages from the uninsured driver directly, which typically means that they are left with no justice (most often, uninsured drivers have no recoverable assets and the costs of seeking a judgment outweigh any benefits).

But, a good attorney will go the extra mile. They will not take the insurance carrier's word without proper evidence. Trust, but verify.

California Insurance Code section 11580.2 subsection (a)(1) obligates the insurance carrier to offer uninsured motorist coverage. It also requires a written waiver of the insured when they do not want the coverage. An attorney must always request the written waiver when the carrier states that there is no UM coverage.

If the carrier cannot provide the written waiver with the client's signature, pursuant to subsection (p)(7), uninsured motorist coverage will exist for the insured. It enables the insured to recover a settlement to pay for medical bills and pain and suffering.

If you, or someone you know, has been involved in an accident with an uninsured motorist, contact an experienced attorney. He or she may be able to obtain UM coverage despite an insurance carrier's assertions that no UM coverage applies.

Proposition 213 in Motor Vehicle Accidents

A number of our blog posts have touched upon the subject of prospective clients being injured by the actions of an uninsured motorist. This post will talk about individuals who are uninsured, that happen to get injured by an insured party in a motor vehicle accident.

Back in 1996, California voters passed Proposition 213. The purpose of the proposition: remedy an imbalance in the justice system that resulted in unfairness when an accident occurred between two motorists -- one insured and the other not. The law wanted to encourage insurance, and legal, compliance. So, it precluded uninsured motorists, and drunk drivers, from pursuing noneconomic damages in a lawsuit. Noneconomic damages include, pain and suffering, physical impairment, and disfigurement.

Prior to litigation, when there is a claim open with an insurance company, Proposition 213 can have a serious impact on negotiating a settlement. If a party is uninsured, but bringing a claim, the value of his or her damages are limited. Typically, adjusters will calculate noneconomic, or general damages, in their evaluations. But they will also calculate Proposition 213 if the claimant is uninsured -- they have an incentive to settle it for far less.

Initially, plaintiffs attempted to challenge the constitutionality of Proposition 213. The Equal Protection Clause, First Amendment, and Due Process Clause were all cited as grounds for invalidating Proposition 213. The claims all failed and Proposition 213 was upheld by the California Supreme Court.

Since 1996, the law has been expanded and interpreted broadly -- sometimes unjustly. Of course there are exceptions in place. For example, an uninsured employee driving an employers vehicle, which is not insured, can still recover if they are injured by a third party. A decedent's estate may also pursue general damages if the decedent was uninsured. Nevertheless, Proposition 213 is still applicable today, and important in evaluating a potential personal injury case.

The important take away: make sure you are insured! It is not only the law, it is also in your financial interest. And like our office has stated in other posts, you may as well add "uninsured / underinsured motorist coverage" and "med pay coverage." As always, we would be happy to speak with prospective clients to discuss your potential case in more depth. 

California Appellate Case Adds Bite to Bad Faith Litigation

Insurance companies are supposed to serve the interests of their insureds. By paying a premium, insureds should expect peace of mind, financial security, and a good faith investigation in the event of an accident. Unfortunately, that isn't the case all of the time.

Sometimes insurance companies act in "bad faith."Bad faith" is a legal term derived from principles of contract. Certain contracts,  like insurance, require that  parties act with "good faith and fair dealing," with one another. Specifically to insurance, insurers are mandated to fairly investigate, evaluate, and process a claim.

When an insured's insurance company fails to properly evaluate or process a claim, it could potentially lead to "bad faith" litigation against that insurance company. Recently, a California case expanded the ability for insureds to bring a bad faith litigation case against their own insurance company.

MASLO V. AMERIPRISE AUTO & HOME INSURANCE (2014)

The Plaintiff in Maslo was involved in a motor vehicle accident where it was found that the other driver was at fault. After medical treatment for a number of months, Plaintiff submitted a demand to his own insurance company for the policy limits under his UM (uninsured motorist) provision.

Ameriprise, the insurer, asked for an extension, and then commenced arbitration proceedings. In doing so, it did not make a settlement offer and refused to mediate the matter. As a result, Plaintiff had to wait an additional 2 years to receive an award, less than the policy limits.

After arbitration, Plaintiff filed a bad faith lawsuit against Ameriprise. Plaintiff alleged that Ameriprise forced Plaintiff into arbitration without investigating, evaluating, and attempting to resolve the claim. Ameriprise rebutted, as a defense, that there was a "genuine dispute" regarding payment, and that the arbitration award evidenced as much, since it was less than the policy limits. Ameriprise further stated that it was the fault of Plaintiff for overvaluing his own claim.

The trial court agreed with Ameriprise but the California Court of Appeal, 2nd Appellate District disagreed and reversed. The Appellate Court held that an arbitration award lower than the policy limit does not necessarily preclude an insured from bringing a bad faith lawsuit. It stated, in part:

"An insurer’s statutory duty to attempt to effectuate a prompt and fair settlement is not abrogated simply because the insured’s damages do not plainly exceed the policy limits. Nor is the insurer’s duty to investigate a claim excused by the arbitrator’s finding that the amount of damages was lower than the insured’s initial demand. Even where the amount of damages is lower than the policy limits, an insurer may act unreasonably by failing to pay damages that are certain and demanding arbitration on those damages."

WHAT DOES IT MEAN FOR OTHER INSUREDS?

The recent decision makes it clear that insurance companies cannot simply rely upon an award, in of itself, to clear themselves of "bad faith." Insurance companies have a duty to thoroughly investigate, evaluate, and process a claim after liability is determined, no matter if they think that they can prevail at an arbitration proceeding. This means that insurance companies will have to make a good faith attempt to settle first party claims prior to arbitration.

It is always best to have an attorney represent your interests. Our office has a lot of experience in dealing with insurance companies -- and potential "bad faith" situations. We welcome your questions, calls, and cases.

You Should Know What's In Your Automobile Insurance Policy

As a practicing injury accident attorney, I get the pleasure of having to deal with insurance companies on a daily basis. Insurance companies are essential but if you do not understand the relationship between the insurance company and yourself, you could find yourself in trouble later on.

Almost every client we retain lack knowledge on what is specifically in their insurance policies. They do not know what their bodily injury policy limits are. Or whether they have rental coverage. Some do not even know what medical payment coverage is or uninsured motorist coverage for that matter. It is a problem because it can leave you having to pay for expenses out of pocket that could have been avoided.

Let's discuss insurance policies so that my readers can be prepared, and financially secure in the event of an accident.

WHAT IS INSURANCE?  

First, what is insurance? Insurance spreads risk among a number of parties. You purchase a contract with a premium, to cover you in the event of an occurrence. That occurrence could be as simple as a rear-ender or as devastating as multi-vehicle collision resulting in death. The pooled risk, held by the big insurer, pays for the liability of the negligent party, and in some cases, the defense fees in litigation. Thus, the insurance contract transfers risk. You pay the premium so that if something bad does happen -- namely, an accident that you were at fault for -- you do not have to go bankrupt.

BASIC PROVISIONS

Second, automobile insurance policies have different levels of "protection." The insured gets the choice of paying a higher premium to obtain more beneficial provisions. Thus, if there is an unfortunate vehicle accident, the insured gets more security, i.e. does not have to pay out of pocket for a rental, does not have to pay out of pocket for medical treatment when liability is in dispute, and so on.

You should be familiar with some of the most basic provisions. One, you should know your bodily injury limits. A policy limit is the monetary limit at which the insurance company will pay for that specific liability. For example, a person with a $50,000 bodily injury limit will not have to pay anything out of pocket if the damages to the injured party do not exceed $50,000. However, if it was a catastrophic injury, the person's assets could be in jeopardy. Therefore, you should consider whether a higher limit makes sense for your particular circumstances.

Two, you should know whether you have rental coverage and medical payments coverage. Rental coverage means that your rental will be paid for while you vehicle is being repaired regardless of fault. Most individuals do not know that their property damage coverage may not extend to the rental. Medical payments coverage, similar to rental, will cover medical treatment up to a certain limit, regardless of fault. Thus, if you need to be transferred to the hospital immediately and undergo emergency treatment, the bills will be paid for by this provision -- even if it is questionable whether you were the cause of the accident.

Three, you should be aware of your uninsured motorist coverage. In California, you have to specifically sign and waive this provision if you do not want it. Uninsured motorist coverage will pay for your medical treatment and bills if the negligent party does not have insurance of his or her own. It's wise to purchase uninsured motorist coverage, because you should always protect yourself first -- and you cannot expect for everyone to abide to the law of the land.

QUESTIONS?

If you are unfamiliar with certain provisions in your insurance policy, you should contact a personal injury attorney. Lawyers in this field have the experience and knowledge on how to advise individuals appropriately. Finally, remember that knowledge is power -- and in this area, it could mean savings too.

Do I Need Uninsured Motorist Coverage?

Clients frequently ask me what uninsured motorist coverage means and if it’s something they need to buy with their car insurance policy. In a perfect world, the easy answer would be no. Why pay for insurance coverage for other people who are already required by law to buy their own policies? Unfortunately, the reality in California is somewhat less idyllic. While it is true that California law requires all drivers to maintain sufficient financial responsibility (practically speaking, car insurance), the unfortunate truth is that far too many drivers are on the road without insurance coverage. In fact, as of 2004 -- the last year for which statistics are reported on the State’s insurance portal, just over 14% of California drivers did not have even the minimum insurance coverage required by law.

Many more drivers carry only the state minimums--currently $15,000 per person, $30,000 per incident, a level sufficient to cover only the most minor of accidents. As a result, California drivers are generally advised to carry Uninsured/Underinsured Motorist coverage riders on their car insurance policies. Here is an overview of what each term means and how such coverage can help to protect you and your passengers.
Uninsured Motorist Coverage

Uninsured motorist coverage (UM) is insurance provided by your own insurance company which will pay you, and your passengers, for injuries caused by another at-fault driver who does not themselves have any insurance coverage for the accident in question. In other words, it’s coverage you buy for other people who might hit you. This type of coverage is necessitated by the fact, as noted above, that so many California drivers don’t carry sufficient insurance of their own.

Frustrating as it may be to pay for insurance which is essentially designed to cover someone else’s actions, the benefits often far outweigh the costs. While the cost of obtaining UM insurance varies depending on the amount of coverage, the company providing the policy, and the vehicles or drivers for which coverage is sought, the costs of an accident often greatly exceed any such premiums; frequently to the tune of several thousand dollars.

For example, according to statistics provided by the California DMV, the average cost of a level 1 accident--the least severe accident type on their scale-- is over $12,000; a number that greatly exceeds the usual cost of retaining UM coverage for several years. In other words, a single accident in which your insurance company pays you out of UM coverage is likely to more than make up for what most people spend on such coverage.

Underinsured Motorist Coverage

Underinsured motorist coverage (UIM) is similar to UM coverage except that it steps in even when the other driver has insurance but where that person’s coverage is insufficient to pay for the extent of the damages they cause you. In other words, it’s insurance you buy to cover people who don’t buy enough insurance of their own.

There is one small catch to UIM coverage. The at-fault party’s available insurance is deducted from the amount your company will pay you out of your UIM policy. For example, let’s say that someone hits you and is found at-fault; causing you $30,000 in damages. Let’s further say that this defendant had state minimum coverage of only $15,000. Finally, let’s say that you have chosen to purchase UIM insurance in the amount of $30,000. After the dust settles, you’ll collect $15,000 from the offending party’s insurance carrier (their policy limit) and an additional $15,000 from your own UIM coverage ($30,000 in UIM coverage - $15,000 from the other party), for a grand total of $30,000 in damage compensation.

As this example demonstrates, a driver who did not buy UIM coverage would find themselves left with $15,000 in unpaid expenses as a result of the same accident. As with UM coverage above, the cost of obtaining UIM coverage is usually much less than the cost of covering the other party’s insurance gap out of your own pocket.

Health Insurance is not the same

Many people counter that they have health insurance that will cover the costs of treatment after an accident and ask if this will reduce the incentive to purchase UM and UIM coverage. The answer is a solid NO. Health insurance is not the same thing as accident insurance. Health insurance is not designed to compensate you for the whole of an accident, it only covers your medical expenses. Health insurance will not pay you for lost wages, will not pay to fix your car, and will not cover your passengers, unless they have their own health insurance coverage. Additionally, health insurance is often not comprehensive. Some medical treatments are not covered at all, others are covered only for a limited period of time, and still others are covered only after expensive co-pays and deductibles are met out of pocket.

Having health insurance will help to smooth the recovery process after a car accident, but it does not come close to replacing proper liability insurance in most situations. Don’t gamble with a patchwork of coverage when UM and UIM coverage are so readily available.

They’re required to offer

In California, insurance carriers are required to offer Uninsured and Underinsured motorist coverage with all car insurance policies that they sell in the state. If you need more information about obtaining this kind of coverage for you or your family, we strongly recommend that you contact your insurance carrier immediately for details. Further, if you have been involved in an accident, we can aggressively handle your case so you can recover all that is owed to you; including the claims that may fall under your UM and UIM coverage in your own insurance policy.