UNINSURED MOTORIST AUTOMOBILE INSURANCE:

                                                          Why do you need it?

                                                                           by

                                                             Attorney Steve Olson

                  For additional information: link to Radosevich, Mozinski, Cashman & Olson LLP

 

Years ago, as a young male with a new driver's license, my car insurance rates were extremely high.  Particularly since my income as a high school student was low, insurance premiums were very difficult to pay.  I did not carry uninsured motorist protection on my policy.  At the time, I believed uninsured motorist protection was to provide insurance for someone who did not carry insurance.  WAS I WRONG!!  Uninsured motorist insurance would have protected me if I had been injured by another driver or car that had no insurance. 

 

Assume you were injured in a car accident in which you were struck by an uninsured driver who went through a red light.  You have been off work and, although you are about to go back to work, your doctor has restricted you to light duty.  You need physical therapy sessions during the hours you would normally be at work.  Your medical bills are mounting.  Your regular health insurance carrier has paid a good share of those bills, however, since you are off work you are having real problems meeting co-payments and deductibles, in addition to the everyday expenses of life such as your house payment or rent, utility bills, etc. 

 

The accident wasn't your fault, however, the other driver had no insurance.  To whom can you turn for compensation for the injuries, medical bills, and wage loss you have suffered?  Answer: Your own uninsured motorist protection.

 

With a few exceptions, Wisconsin does not require drivers to have insurance.  Uninsured motorist protection steps in to take the place of insurance which the other driver should have had.  Accordingly, if you have an uninsured motorist policy, you can now make a claim for your damages, no matter what they may be, against your own uninsured motorist insurance policy.  Your uninsured motorist policy, subject to the policy limits you selected, is available to compensate you for wage loss, medical bills, emotional distress, pain and suffering, loss of society and companionship, etc. 

 

Even though your insurance company may have paid your claim under your uninsured motorist policy, this does not mean the uninsured driver is allowed to escape the consequences of his or her negligence altogether.  After your insurance company has paid damages to you, your insurer assumes your claim against the uninsured driver.  Your insurance company may then start collection action against the uninsured driver, sue him or her for the damages paid to you, and request the State of Wisconsin suspend his or her driver's license until the insurer has been repaid.  In Wisconsin, although automobile insurance is not required, if someone has been in an accident, is at fault, and has no auto insurance, the person or company likely to be owed money as a result of the accident may request the State suspend the person's driver's license until a bond in the amount of what is owed is paid, the parties enter into a repayment agreement, or the claim is paid in full.

 

The advantages of uninsured motorist protection are obvious.  You could wait years for an uninsured driver to pay your damages or, more likely, the uninsured driver may declare bankruptcy which, in most instances, will wipe out his or her liability to you.   With uninsured motorist protection, once any legal and factual issues relating to the accident and your injuries have been decided, such as how much your claim is worth, your insurance company will compensate you on the uninsured driver's behalf.

 

One of the most important attributes of uninsured motorist protection is that it is 'personal and portable'.  This means that it follows you around, providing protection to you or anyone who lives in your household (no matter what their age), whenever you or they are injured by an uninsured or hit and run vehicle.  Therefore, if your son or daughter who lives with you accepts a ride from a friend who is uninsured and has an accident, your son or daughter will be able to claim against your uninsured motorist policy.  This is true even though the vehicle for which the uninsured policy was issued was not involved in the accident.  Similarly, if you or a family member are out for a walk and are struck by an uninsured vehicle, or by a hit and run vehicle which leaves the scene and is never apprehended, you are able to make a claim against the uninsured motorist policy. 

 

You must be very careful when selecting the policy limits of uninsured motorist coverage you purchase.  Automobile insurance policies contain a number of definitions and exclusions which will reduce the amount of insurance coverage available to you, even though you have paid for much higher limits.  For example, assume you selected $50,000 in uninsured motorist coverage on two separate vehicles.  You pay two separate premiums for the uninsured motorist coverage on the two separate vehicles.  Since you know uninsured motorist coverage is 'personal and portable', and you have paid two separate premiums for two separate policies, much like having two separate life insurance policies, you would  expect you should be able to make a claim against each $50,000 policy, right?  Answer: Wrong.  In 1995 the Wisconsin Legislature, as part of tort reform legislation, passed a law which allows insurance companies to insert what are called 'anti-stacking exclusions' in automobile policies.  Most companies had those exclusions for years, however, Wisconsin courts had previously outlawed anti-stacking exclusions under the legal theory that they create illusory coverage, since a consumer could never claim against more than one uninsured policy. 

 

What the 1995 legislation means to you is that, even though you pay separate premiums for multiple uninsured motorist policies on different vehicles, you can only make a claim against one uninsured policy.  Accordingly, you must make sure the policy limits you purchase for uninsured motorist protection are reasonably high.

 

When you select coverage limits for uninsured motorist protection, you must keep several other things in mind.  For example, assume that based upon your annual earnings, you feel that $100,000 in uninsured motorist protection is probably sufficient.  You may believe that if you are injured by an uninsured or hit and run driver seriously enough to make your claim worth more than $100,000, that you would be able to get by on $100,000 nonetheless.   You must remember that the entire $100,000 is likely not available to you.  For example, assume you have $30,000 in medical bills.  They have initially been paid by your group health insurance carrier, except for deductibles and co-payments.  Issue: When you settle your claim against your uninsured motorist insurer, you will likely have to pay back to your group health insurer some or all of the medical bills which they initially paid.  Depending on the amount of the bills, that could significantly reduce your claim.  It is also important to keep in mind that there may be significant costs involved in making your claim.  These could include attorney's fees, deposition costs, filing fees, medical records costs, expert witness fees, etc.