In May, I wrote Part I of this blog and explained why uninsured motorist coverage/underinsured motorist coverage is very important. In summary, many people in Ohio drive without insurance coverage. Many others drive with state minimum insurance coverage. What does this mean for car accident victims who are the victims of uninsured and underinsured motorists?
To comply with the financial responsibility act, drivers in Ohio must have $25,000 per person/$50,000 per crash (aka per occurrence limits). This means no injured person collects more than $25,000 from insurance policy no matter how badly they suffer. Further, no group of people injured collects more than a total of $50,000. Again, it does not matter if there are serious injuries. Worse yet, the $25,000 per person limit includes medical expenses.
Why is it a good idea to have uninsured motorist coverage and underinsured motorist coverage? With the right coverages, you get a more just amount for your compensatory damages. Let’s use examples drawn from real life situations for two car accident victims. Please note, the car accident case described below is a compilation of many past clients, and does not reflect a specific insurance claim.
Michael Eisner is your car accident lawyer. He will give you a free consultation and case review. Contact him if you want to review your claim and how your insurance applies to your specific case.
Example: Multiple car accident victims, with and without uninsured and underinsured motorist insurance
Three friends are riding in a car. Unfortunately, when the driver stops at a stop sign, the car behind them slams into their vehicle. Witness statements prove the driver of the striking car was texting at the time of the crash. He was insured only to keep himself legal. Worse yet, he is unemployed and has no personal assets to collect. This is not all that different from many other rear-end collisions. Even though they were all in the same wreck, the three innocent parties are all treated differently. This is because they have different insurance coverage.
The driver’s auto insurance did not have um/uim coverage:
The driver is a 16-year-old girl named Sammy (fictitious name). She was a cautious driver in her new car. Of course, it was not her fault that the at-fault driver was distracted by his cell phone. Sammy goes to the emergency room with more than one serious injury. After being transported to the hospital, the doctors find two broken bones – her right wrist and her right tibia. These are both serious injuries. In fact, her medical treatment includes surgery to fix her lower leg injury. Sammy’s medical expenses alone were over $85,000. Her two friends also suffer significant injuries.
The front seat passenger’s family had an uninsured and underinsured motorists policy, with coverage limits of $500,000/$1,000,000
The front seat passenger is an 18-year-old senior in high school named Brent (fictitious name). Brent was his school’s star running back. He had a football scholarship lined up to pay for college. After the crash, he gets medical attention for a neck and lower back injury. Brent’s cervical spine does not respond to physical therapy. His physical pain shot down his arm, and he lost strength in his hand. He was no longer able to hold a football securely. Sadly, this young man’s serious injuries required neck surgery to fuse three vertebrae. He never again played football. Worse yet, he lost his scholarship. His surgeries and other care cost $185,000.
The back seat passenger was insured by his family’s policy with uninsured motorist coverage or underinsured motorist coverage of $25,000/$50,000
The back seat passenger, Max (fictitious name), is the football player’s best friend. He is 18 . He suffered a concussion (a traumatic brain injury). Out of an abundance of caution, he stayed in the hospital for 3 days. Although he had headaches, vertigo, things tasted different, and he was irritable, he improved with rest and therapy. About 4-5 months after the crash, he finally felt normal again. However, his medical bills were roughly $45,000 including the CT-scan, MRI, neurology visits and therapy. Also, he missed 2 weeks from school, and lost $895 in wages from his after school job. His total economic damages were just over $45,000.
How does the $50,000 get divided between the three friends? Will they stay friends?
All of the friends have injuries worth more than the $25,000 per person maximum. Therefore, all of their claims combined are worth far more than the $50,000 per crash limit. However, only $50,000 is available to split between all three. Since each claim is worth so much, the insurance adjuster quickly offers the per occurrence limits. All must split this money. Now, because there is not enough money available from the at-fault driver’s insurance, the three friends must fight over who gets what share. Because the friends have a conflict, they each need to hire their own personal injury lawyer.
Sammy, who doesn’t have uninsured motorist coverage or underinsured motorist coverages, is limited to what she can get from the $50,000 limits shared with her friends. On the other hand, Brent and Max’s underinsured motorist coverage kick in. Therefore, they each get more. However, to go after their own insurance company, each must get permission from their insurer to settle. Because Sammy is under 18, her share is subject to probate court requirements and restrictions (this will be the subject of a later blog). If the passengers with um/uim coverages do things wrong, they destroy their rights. It is a good idea for them all to hire experienced personal injury attorneys.
How do the lawyers and insurance companies decide who gets what share of the liability insurance policy?
Typically, the injured parties must divide the limits proportionate to their damages. Because Sammy doesn’t have UIM, the friends want Sammy to geta full $25,000 per person share. However, their underinsured motorist carriers may dispute this because their payment is offset from any insurance available and not against the total damages. That is the difference between stacking and non-stacking coverages.
What is the difference between stacking and non-stacking insurance coverage? Max’s case is an example.
A stacking policy pays based upon the total provable damages to their insured. Let’s look at the way that applies to the Max. First, he could collect his share from the defendant’s insurance. He would then collect an additional $25,000 from his own insurance company (her policy limits).
Sadly, Ohio law permits anti-stacking language in the insurance contract. Because insurance companies want to pay as little as possible, the policies are almost always non-stacked. Therefore, under Ohio law, Max’s policy stands next to the at-fault driver’s policy. His underinsured motorist carrier receives an offset from the available money from that policy from its limits. Accordingly, Max only gets a total of $25,000 from all available insurance. Unless his economic damages can be significantly reduced, with over $45,000 in economic loss, he experiences financial ruin.
Fortunately, Max hired an experienced personal injury lawyer. His lawyer successfully reduced Max’s medical bills so that he no longer had debt from the crash. Max even received some money for non-economic damages after attorney fees, case expenses, and payment of the reduced bills. Thus, the lawyer helped Max and made a difference for him. Even so, if Max’s policy was stacking, he would have received even more.
The breakdown after negotiations and application of uninsured and underinsured motorists coverage
Max and Brent, through their lawyers, insisted that Sammy get more of the settlement from the responsible driver’s insurance. However, their insurance companies wanted her to get less so they could pay less (anti-stacking language at its best). With the result being the same for Max and Brent, their lawyers convinced their clients’ insurance companies. Accordingly, Sammy received a $25,000 settlement. Sammy’s share was probated, but her family was left with significant bills because there was no underinsured motorist coverage.
Max and Brent split the remaining $25,000. Because they both had unstacked underinsured motorist coverage, it didn’t matter how that money gets divided. Brent had very serious injuries. He has permanent injuries, and he requires future surgeries. Although his insurer initially offered $250,000 of their limits, his lawyer hired the correct experts, built a strong case, and recovered the full $500,000 for Brent. His bills, attorney, and expenses got paid. Brent received a significant amount of compensation. Because his family had uninsured motorist coverage and underinsured motorists coverages and due to the good work of his lawyer, he has a head start on his adult life. His injury lawyer made a real difference for him.
Each of the three friends suffered greatly. This unexpected loss resulted in great stress, fear, anger, and pain. The potential battle over who gets what share tests friendships. Further, Brent getting more than Max, and Max getting more than Sammy challenges their friendship. Luckily, these three fictitious friends managed these challenges. They remain lifelong friends despite the hardships.
What happens to Max and Brent’s Insurance Rates?
Many people worry that presenting an uninsured or underinsured motorist insurance claim increases their rates. Under Ohio law, it does not. Ohio Revised Code section 3937.23 prohibits the insurance company from raising rates unless the insured caused their damage or is convicted of a violation of law due to the crash. Since Max and Brent were both innocent passengers, their rates don’t change because of the incident. If the insurer raises rates for the incident, it is subject to a bad-faith lawsuit.
What to do if you are in a motor vehicle crash?
Have you been injured in an auto accident? Get proper medical care and let your doctor know of all of your physical and emotional changes from the crash. Call ME, Michael Eisner at 216-905-2200 for a free case evaluation. On most cases, I only charge a fee when I am successful in getting you a recovery.
Michael Eisner has proudly represented injury victims in Ohio for over a quarter century. http://michaeleisnerlaw.com/contact-us/