Motorist Claims Involving Underinsured (minimal insurance coverage) and Uninsured (no insurance coverage)
When you’re in a car accident, you have no control over the amount of insurance the other driver has. In fact, the other driver may have no insurance at all. This is when underinsured and uninsured motorist policies come into play.
Underinsured and uninsured motorist policies are optional and provide an extra layer of protection. Basically, these policies offer coverage when someone is injured in a Michigan car accident and then finds himself or herself without enough benefits to cover the injuries, or finds that the at-fault driver doesn’t have any car insurance.
What if the person who caused the car accident doesn’t have enough insurance to fully compensate me? What if they have no insurance at all?
An underinsured (UIM) motorist policy will fill the gap when the value of the injured person’s liability claim exceeds the amount of the at-fault (negligent) driver’s insurance policy.
For example, say your car accident claim has a value of $50,000, but the person that caused the crash only has $30,000 in coverage. If you have an underinsured motorist policy, you would collect $30,000 from the at-fault driver’s insurer and then proceed against your own insurance company, through your own underinsured policy, for the remaining $20,000.
An uninsured (UM) motorist policy applies when the negligent driver has no insurance at all. In Michigan, more than 20% of all drivers are operating their vehicles without the required no-fault insurance. In other words, Michigan drivers have a 1 in 5 chance of being in a car accident with a person who has no insurance. For example, uninsured motorist coverage would apply if you’re ever in a hit-and-run crash.
Uninsured and underinsured policies can be purchased, usually at a minimal cost, to cover drivers, their families and their passengers. In this video, Grand Rapids auto accident attorney Tom Sinas talks about uninsured and underinsured motorist policies, and why it’s important for Michigan drivers to purchase these optional coverages.
Be Cautious: Special Conditions May Apply
Uninsured and underinsured policies are not required in order to have valid Michigan no-fault insurance. Rather, these coverages are a choice. As such, uninsured and underinsured policies are not directly regulated by the Michigan Auto No-Fault Law, and certain special conditions may apply in order to make a claim for benefits.
The Michigan Supreme Court has made it clear, on several occasions, that such optional policies are governed by the express terms of the contract. For example, in DeFrain v State Farm, 491 Mich 359 (2012), the Michigan Supreme Court denied benefits to a pedestrian who was struck in a hit-and-run accident and later died as a result of his injuries. The Court found that, although the individual was in critical condition and was unable to provide notice of the accident to the insurance company until some 60 days after the accident, the terms of the contract required notice within 30 days and this 30-day notice provision was binding. Because the injured individual did not provide notice within 30 days, the Court held that his estate could not pursue a legal claim.
Therefore, when purchasing uninsured and underinsured motorist coverage, you should carefully review the policies. Make sure you understand the amount of coverage that is offered and any conditions that must be satisfied in order to make a claim for benefits.