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Question 8: What are Michigan uninsured and underinsured motorist claims?

Oftentimes, the injuries suffered by an auto accident victim are caused by a negligent party who either had no liability insurance or had inadequate liability insurance to fully compensate the injured person. In these situations, the uninsured or underinsured negligent driver is typically not collectible. However, if uninsured motorist coverage and/or underinsured motorist coverage has been purchased by the injured person or the owner of the vehicle occupied by the injured person, then the injured person will be able to pursue the liability claim against the insurance company that issued the uninsured/underinsured coverage.  Basic principles regarding uninsured and underinsured motorist claims are summarized below.

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A. Uninsured Motorist Benefits

If an injured person’s policy includes uninsured motorist coverage, and if the injury was caused by an uninsured driver, the injured victim will be able to assert his/her liability claim directly against his/her own insurance company who will then “stand in the shoes of the negligent driver.” The injured person will be able to recover noneconomic damages and excess economic damages up to the limits of his/her uninsured coverage in exactly the same manner they would have, had the negligent party been insured. If the injured person did not purchase uninsured motorist coverage but was a passenger in a vehicle that was covered by uninsured motorist coverage, the injured person may very well be covered under that policy.

There are certain strict rules that must be followed so that an uninsured motorist claim is not jeopardized, particularly in the case of hit-and-run accidents. Many insurance policies contain specific rules about what a victim must do in order to preserve a claim for uninsured motorist benefits when there is a hit-and-run. Moreover, the Michigan Supreme Court has strictly enforced these notice rules, even in extreme situations.  For example, in 2012, the Michigan Supreme Court held that an insurer could deny uninsured motorist benefits to a seriously injured victim of a hit-and-run because the victim did not provide timely notice, despite the fact that the victim was incapacitated.  Therefore, extreme caution is necessary to protect these claims!

B. Underinsured Motorist Benefits

If the injured person purchased underinsured motorist coverage and if the injury was the result of the negligence of someone who has inadequate liability limits to fully compensate the injured person, he/she can pursue that portion of the liability claim not covered by the at-fault driver’s insurance through the injured person’s own insurance company in much the same manner as one would pursue an uninsured motorist claim. If the injured person did not purchase underinsured motorist coverage but was a passenger in a vehicle that was covered by underinsured motorist coverage, the injured person may very well be covered under that policy.

As with uninsured motorist claims, there are certain strict rules that must be followed so that the underinsured motorist claim is not jeopardized.  For example, underinsured motorist policies typically require that the injured person completely exhaust the negligent party’s liability limits before pursuing the claim for underinsured motorist coverage.  In addition, most policies require that the injured person obtain written consent from his/her insurance company before settling with the negligent party.  There may be other very important conditions set forth in the policy that must be complied with in order to pursue such a claim, such as shorter notice-of-claim requirements.  Failure to follow these policy conditions can result in the loss of underinsured motorist benefits.  Once again, extreme caution is necessary to protect these claims!

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