Why Uninsured Motorist Coverage is Essential
Michael Rubinstein, Esq.
Drivers in California face a serious predicament every single day: Millions of drivers are driving without insurance. Perhaps an even greater number do carry insurance, but not enough to cover potential losses caused by a traffic collision.
California law requires every car to be insured for a minimum of $15,000 in damages per person, and $30,000 per accident. The problem is that this meager coverage limit was enacted in the early 1970s, and it hasn’t adapted over time. $15,000 gets swallowed up easily in a routine collision, let alone a more serious one. Even with this low amount of coverage, millions of drivers ignore the law and simply do not purchase auto insurance.
This is where uninsured/underinsured motorist coverage kicks in. It is meant to fill in the gaps in the event the at-fault driver is uninsured, or carries insufficient coverage to pay for the damages. If you have uninsured motorist coverage, that coverage will allow you to recover damages from your own insurance policy. This is unique, because in this situation, your insurance carrier takes the place of the uninsured driver who hit you.
Many times, clients are confused by how this works. They are not comfortable “suing” their own insurance carrier, and they are also concerned that seeking to recover damages from their own insurance company will cause a dramatic increase in their monthly insurance rates. This concern is understandable, but it is incorrect.
An insurance company cannot penalize you for accessing your own uninsured motorist coverage. If you have this type of coverage, it is something you pay for every month. In fact, if you review your auto insurance policy, you will see that a portion of each premium payment you make is segregated by the insurance carrier to cover the costs of an uninsured motorist claim. An insurance company would be breaching its contractual duties to you if it raises your rates in response to your lawful right to access this coverage for an accident in which you were not responsible.
Uninsured motorist coverage is also what protects policyholders in the event of a hit and run. This is particularly important in a city like Los Angeles. The LAPD estimates that there are over 20,000 hit and run cases every year. Uninsured motorist coverage protects you in the event of a hit and run, provided that one files a police report within 24 hours of the incident. This is intended to prevent fraudulent claims because it is a crime to file a false police report. Uninsured motorist coverage also applies to bicyclists and pedestrians hit by a car that 1) has no insurance; 2) has too little insurance; or 3) flees the scene. This is unique in that it is a form of auto insurance coverage that applies when one is not inside his or her car.
Uninsured motorist cases are unique in another way. In the insurance world, these cases are known as “first party” cases. The typical car crash is a “third party” case – Driver A making a claim against Driver B’s insurance policy. In the uninsured motorist context, Driver A is making a claim against his/her own insurance. Driver A is a paying customer, so the insurance company must treat its own paying customer with strict fiduciary duties. There can be consequences to an insurance company who downplays the claim or accuses its customer of presenting an exaggerated claim – common insurance company tactics in a third party case. Cases have held that insurance companies who mistreat their customers and attempt to get away with not paying fairly on an uninsured motorist case can be liable for bad faith.
Uninsured motorist cases usually settle agreeably between the policyholder and insurance company. But if an agreement cannot be reached, these cases must be arbitrated before a private judge, known as an arbitrator. They cannot be litigated in court. Uninsured motorist cases require unique skill and should be handled by an attorney familiar with the unique procedural requirements associated with these cases.
Uninsured/underinsured motorist coverage is crucial for drivers in California, especially in Los Angeles. In this context, an uninsured motorist claim is the rare occasion where an insurance policyholder has leverage over his or her insurance company – which is the exact opposite of most interactions with insurance companies. I strongly recommend drivers maintain as much uninsured/underinsured motorist coverage as they can afford. Talk to an attorney or insurance broker for questions about your particular situation.
Michael Rubinstein is a Los Angeles based personal injury and accident attorney. He may be reached by visiting http://www.rabbilawyer.com, or by calling 213-293-6075