Underinsured & Uninsured Motorist Coverage

By Michael Goldberg

I was recently asked a question by an attorney friend concerning underinsured/uninsured (“UM”) motorist coverage. The question posed was this: “What happens at trial when a UM insurer answers in its own name and the at-fault driver is uninsured?” To understand the answer to this question, you have to understand how UM coverage works. A person can purchase UM coverage for their own vehicle. The UM coverage will provide additional coverage if the person is hit by an uninsured or underinsured driver. A driver is considered underinsured if the value of the injury exceeds the amount of liability insurance coverage for the driver. An injured person must first exhaust the liability coverage for the at-fault driver before he can take advantage of his own UM coverage. In order to reach the UM coverage, the injured party must filed suit against the uninsured driver as if the driver had insurance. The injured party must also serve his own UM insurance carrier with a copy of the complaint. The UM insurer may then answer the complaint in its own name or in the name of the uninsured driver.

Most of the time the UM insurer will answer a complaint in the name of the uninsured driver because the insurer does not want the jury knowing that an insurance company is involved and that the money to pay a judgment will not come from an individual but from an insurance company. The rationale is that a jury is more likely to award money to an injured party if it is known that the judgment is being paid by “insurance money” instead of “real money.” When the UM insurer answers in its own name, the claimant’s attorney at trial is able to explain to the jury that the case involves UM coverage that was paid for by the injured party but covers the at-fault driver. The attorney is not allowed to tell the jury how much UM coverage is involved or to argue to the jury that an award should be given because it is only insurance money. But the attorney can tell the jury that this is a battle between the claimant and his own insurance company and not between the claimant and the driver.

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