All auto insurance policies define certain limits based on how much they are willing to pay per-person and how much they will pay per-accident. If the amount from the at-fault driver’s insurance company is insufficient to cover all damages, victims may want to explore recovery through an underinsured motorist (UIM) coverage policy. This could be a policy the victim held directly or one that covered the non-fault driver in a car accident wherein they were a passenger.
In the recent case of Trotter v. Harleysville, plaintiffs argued that the UIM coverage should kick in when the at-fault driver’s insurer did not pay them the full per-person amount to which they were entitled. The UIM insurer, however, argued that the total per-accident limit had been paid by the at-fault driver’s insurer, and thus it was not required to pay any more. The case was weighed recently by the U.S. Court of Appeals for the Seventh Circuit.
According to court records, the traffic accident in question occurred in July 2011. That’s when the at-fault driver ran a stop sign and caused a four-vehicle accident. Plaintiffs in Trotter occupied one of those four vehicles. There was a driver and two passengers inside the vehicle.
The at-fault driver’s personal auto insurance policy allowed for a liability coverage limit of $250,000 per person and $500,000 per crash.
After lengthy settlement negotiations, plaintiffs eventually settled with the at-fault driver’s insurer. The breakdown of payouts went like this:
- Driver: $250,000
- Passenger 1: $238,000
- Passenger 2: $12,000
Still, the victims stated these amounts were not sufficient to make them whole. This is not uncommon in accident cases, where a single hospital emergency room bill can easily exceed $12,000.
Victims then submitted additional claims to the victim driver’s insurance company, seeking UIM benefits (which rendered any passengers of the vehicle as “insureds”). That policy also allowed for up to $250,000 per person and $500,000 per accident. UIM benefits will only kick in once all other primary insurance policies have been exhausted, and it’s been shown that the at-fault driver doesn’t have enough insurance to cover the damages. Further, it will only cover the expenses that are not covered.
So for example, if one’s UIM coverage is $100,000 and the amount paid by the at-fault driver’s insurance company was $100,000, the UIM carrier will pay $0. However, if the at-fault driver’s insurer only covered $50,00 in damages and the injured person suffered $120,000 in damages, the UIM carrier will only pay $50,000 – the difference between $100,000 and $50,000.
Here, the passengers argued they were not able to recover the full per-person coverage of $250,000, and thus the UIM carrier was responsible to make up the difference. However, the UIM carrier argued that because the $500,000 policy limit per-accident was already reached by the at-fault driver’s insurer, it should not have to pay more.
The trial court sided with defendant and the Seventh Circuit affirmed. The courts found the insurance policy unambiguously allows for a $500,000 per-accident maximum, regardless of the number of insureds involved. Therefore, plaintiffs were not entitled to recover damages.
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Trotter v. Harleysville, May 10, 2016, U.S. Court of Appeals for the Seventh Circuit
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Study: Medical Errors are the No. 3 Cause of Death in U.S., May 3, 2016, Boca Raton Injury Lawyer Blog