In 2017, a new law went into effect that changed how your car insurance operates for underinsured motorist coverage. The good news for consumers is that the law works in your favor, especially if you must file a claim against your insurer after an accident.
To be covered, you must follow particular procedures. Otherwise, the law might work against you.
The new law provides drivers with Enhanced Underinsured Motorist Coverage (EUIM). Before you call your insurance company and start signing up for more policies, you need to understand how this coverage works and what it means for your future.
Traditional underinsured motorist coverage (UM) only applies when you are in an accident with a motorist that has no coverage or too little coverage for your losses.
When you are in this situation, you might assume that you can file a claim with your insurance and receive the full amount. You might also think that you can stack this coverage on top of your other policy and the other driver’s. However, the reality is you cannot.
Your uninsured motorist coverage is there to handle the differences between the policy limits for your coverage and the other driver’s. Therefore, you must first exhaust the other’s coverage before you can seek further compensation.
For example, the other driver has $30,000 in liability coverage and you have $150,000 in UM coverage. At maximum, you can only get $120,000 in compensation from your UM coverage – even if you have that extra $30,000 in the policy. Your policy only takes effect where the shortcomings of the other policy play into the total compensation.
As you can see, your traditional UM coverage is not enough – especially in a severe accident. Enhanced UM fills the gap between what you would receive from your UM policy and your remaining policy.
With an enhanced policy, you can access the total policy limit instead of the difference.
However, enhanced does not come automatically. Instead, you must sign up for the enhanced coverage when you sign up for your policy. If you fail to do so, then you are stuck with the traditional payout methods.
Enhanced coverage is not free. Instead, you will be adding extra coverage, and that gives the insurer the right to charge extra for that service. No one is certain how high these additional policy charges will go, and insurance companies are not required to tell you about it.
Therefore, if you buy a new policy or you are renewing, make sure you ask about the enhanced policy and what it might cost for your policy. Insurance companies are not required to start notifications until June 1, 2018. Therefore, if you renewed or signed up for a new policy before that date, you will need to ask about adding the enhanced coverage option.
You might ask yourself if it is worth the added cost and hassle to upgrade to an enhanced policy. While it is rare that you would find yourself in an accident with someone completely uninsured, it is likely that the person will have too little coverage in the event of a serious accident. Underinsured motorists are more common than uninsured motorists because the state required insurance is rarely enough to handle catastrophic accidents.
Economic conditions have forced more drivers to select the state’s bare minimum insurance requirements. This means people in accidents may find that the other party cannot even cover medical costs – let alone the damage to their vehicle.
Maryland currently requires that you have a valid driver’s license and registered vehicle. For insurance, you must carry a minimum of:
As you can see, the minimum requirements are incredibly low. A severe accident that totals your vehicle and requires that you are taken to the hospital via ambulance and hospitalized for several days would quickly exhaust a policy like this. Once the other driver’s policy is exhausted, you would have to use your underinsured coverage. If you were to have the bare minimum, that means you would gain an extra $30,000. But is $30,000 enough for your injuries or medical costs? Unlikely.
The most you can do at this point is protect yourself. You may want to consider an enhanced policy so that you can access your full coverage. Also, you want more than the minimum coverage amounts, because you never know the coverage the other driver might have.
If you are in an accident with a driver that is underinsured or uninsured, speak with an attorney and explore your options. The team at Koonz, McKenney, Johnson, DePaolis & Lightfoot, LLP, understand how confusing insurance policies can be and how difficult it can be to get one of them to pay when you need it the most.
Let us work as your advocates. We will negotiate with insurers, fight for your right to compensation, and help you get a fair settlement.
Schedule a free, no-obligation case evaluation at our Maryland, Virginia, or D.C. office location. You can also request more information by contacting us online.