Underinsured motorist (UIM) and uninsured motorist (UM) coverage is the most important type of coverage a Pennsylvania resident can purchase. However, it is optional, and most people don’t understand how this coverage works. In order to understand this coverage, let’s take a look at how UIM/UM compares with its cousin, Bodily Injury Liability.
Bodily Injury Liability (mandatory) – protects you from your own negligence or when you cause an auto accident that results in injuries to another party (driver, passenger, pedestrian, etc.)
UIM/UM (optional) – protects you when other, at-fault drivers on the road don’t have enough coverage to compensate you or don’t have any insurance coverage
Under Pennsylvania law, every car insurance policy issued in this state is required to provide at least $15,000/$30,000 of Bodily Injury Liability Coverage. That’s $15,000 per person, to a max of $30,000 per accident. These amounts are the bare bones minimums, and unfortunately, many Pennsylvania residents purchase minimum limits car insurance policies. The max amount applies when more than 1 person is injured. If a Pennsylvania driver with a $15,000 policy hits 2 people and both are injured, the max amount each can recover is $15,000. If the driver hits 3 people, the max amount each can recover is still $15,000. However, in this instance, the insurance company won’t pay more than $30,000 to all three.
UIM/UM is optional. The coverage amounts will usually match or mirror the amount of Bodily Injury Liability Coverage. For example, a Pennsylvania resident who buys car insurance gets a better policy with $100,000/$300,000 of Bodily Injury Liability Coverage. If the individual opts in and purchases UIM/UM coverage, the amount will also be $100,000/$300,000 of UIM/UM coverage. The same goes for a minimum limits policy.
Like the Bodily Injury Liability Coverage amounts, the first number, $100,000, applies per person and the $300,000 limit applies per accident. Using these numbers, let’s say a husband (H), spouse (S) and children (C1 and C2) are injured in a car accident that’s caused by a minimum limits driver. H, S and C1 and C2 can recover no more than $100,000 each in UIM coverage. Their insurance company won’t pay out more than a total of $300,000 to all four.
UIM kicks in when the at-fault driver has a Bodily Injury Liability coverage amount that doesn’t provide enough to compensate you for all your damages.
Example: A Pennsylvania resident is injured in an accident caused by a drunk driver. The drunk driver has a minimum limits policy, $15,000 of Bodily Injury Liability Coverage. The injured individual sustains major injuries and damages that total $200,000. After recovering $15,000 from the insurance company for the DUI driver, the injured individual could make a claim for UIM coverage because the at-fault driver didn’t have enough insurance coverage to compensate him for the injuries and damages.
UM kicks in when the at-fault driver doesn’t have any insurance, i.e., joy-riding, ghost car, etc.
Example: A teenager takes a friend’s car out without permission and hits a pedestrian. Because the car was driven without permission of the owner, the car insurance company isn’t likely to cover the accident. If the injured pedestrian has UIM/UM coverage, she would be able to make a UM claim on her own auto insurance policy. This is true even if she isn’t a named insured, but a member of the household of someone who purchased the policy. For instance, if the pedestrian is covered under her parent’s policy or a spouse’s policy, she would be eligible.
In most cases, a Pennsylvania resident who needs to make a UIM or UM claim will probably have to file a lawsuit against their insurance company. The reality is that car insurance companies are notorious for not paying out on any insurance claims, unless it’s absolutely necessary. This means hiring a car accident lawyer in Pennsylvania to handle the case. The lawyer will put the insurance company on notice of the UIM/UM claim and eventually file a lawsuit.
Under Pennsylvania law, UIM/UM claims are considered contract claims. That’s because auto insurance policies are essentially contracts between an insured and their insurance company. Therefore, UIM/UM claims get a different statute of limitations than an ordinary personal injury case, which is 2 years from the date of the accident. For most contract cases in PA, the applicable statute of limitations is 4 years from the date of the breach, or when the offending party failed to live up to their end of the bargain.
In UIM/UM cases in Pennsylvania, the 4 year clock starts ticking on the date that the insurance company breaches the car insurance contract/policy. This is a relatively new principle in Pennsylvania. Late last year, the Pennsylvania Supreme Court overturned years of precedent. See Erie v. Bristol, a November 2017 case.
Historically, the statute of limitations clock for UIM and UM claims in PA began ticking when the insured individual learned that they needed to make a UIM/UM claim, i.e., learned the insurance status of the other driver as either uninsured or underinsured and that their injuries and damages exceeded the available insurance coverage of the at-fault driver. In the recent Bristol case, the court held that the clock starts ticking when the insurance company breaches its contractual duty by declining coverage or refusing to arbitrate when the insurance contract requires it.
Pennsylvania UIM and UM law is very complex. If you’d like to discuss a Pennsylvania car accident case with our top rated injury lawyers, please contact us for a FREE consultation.
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