Underinsured motorist coverage is put into place to provide additional financial protection to individuals when the insurance of the individual who caused the accident is unable to cover the damage.
Understanding underinsured motorist coverage and its relation to two important California cases known as Schwieterman v. Mercury Casualty Co. and State Farm v. Messinger is important to maintaining your safety and security for the future.
Underinsured Motorist Coverage in California
California's Underinsured Motorist coverage is often described as gap coverage, instead of excess coverage. One of the most significant requirements is the comparison between the following.
- The at-fault driver's bodily injury liability policy limits
- The injured insured's UIM policy limits
In addition, California law focuses on the available policy limits and not the amount an injured person will ultimately receive after those limits are divided among multiple individuals.
Schwieterman v. Mercury Casualty Co. (1991)
In Schwieterman v. Mercury Casualty Co (1991), several individuals were injured in the same accident. The at-fault driver carried liability insurance with limits that were equal to the injured plaintiff's UIM policy limits. Since multiple people declared claims against the same liability policy, the available insurance profits had to be divided among all claimants.
The Court's Holding
The California Court of Appeal concluded that UIM coverage was not available. Rather than examining the amount actually paid to the plaintiff, the court compared the following.
- The offender’s liability policy limits
- The insured's UIM policy limits
Since those limits were equal, the vehicle was not considered "underinsured" under California's legal definition.
State Farm v. Messinger (1991)
The California Court of Appeal reached the same conclusion in State Farm v. Messinger (1991). Again, multiple injured individuals shared the at-fault driver's liability insurance. The plaintiff argued that because the available liability earnings were divided among several victims, the offender should be treated as underinsured.
The Court Reaffirmed the Rule
The court rejected that argument and reaffirmed the approach adopted in Schwieterman. The approach was that California courts compare the following.
- Liability policy limits
- UIM policy limits
Steps to Take
The following are important steps to consider.
1. Compare Policy Limits
The first step is to determine the following:
- The offender’s bodily injury liability limits.
- The insured's UIM limits.
2. Identify All Potentially Responsible Parties
Many accidents involve more than one potentially liable party. Depending on the facts, additional defendants may include but are not limited to the following.
- Employers
- Vehicle owners
- Negligent entrustment defendants
- Product manufacturers
- Government entities
- Property owners
- Additional insured parties
3. Determine Whether Additional Insurance Exists
Examples may include:
- Excess insurance
- Commercial automobile coverage
- Employer policies
- Additional insured endorsements
Each source of insurance should be evaluated individually and thoroughly.
4. Verify Offset Calculations
UIM carriers receive statutory credits under certain circumstances. However, calculating those offsets can become very difficult. A careful review may help determine whether the carrier is applying the appropriate credit under California law.
5. Review the Insurance Policy Language
Not every policy provides identical language. Coverage may depend upon how the policy defines the following.
- Underinsured Motor Vehicle
- Limits of Liability
- Offset provisions
- Other Insurance clauses
6. Evaluate Claim Handling
Even where there is a fair conflict regarding coverage, insurers often remain responsible for handling claims in agreement with applicable legal standards. This may include but is not limited to the following.
- Conducting a reasonable investigation
- Interpreting policy provisions appropriately
- Evaluating damages fairly
- Communicating with the insured
- Avoiding unnecessary delay
Later Authority: Quintano v. Mercury Casualty Co.
In Quintano v. Mercury Casualty Co, (1995), the California Supreme Court addressed procedural aspects of UIM claims. It is important to note that the Court did not overrule Schwieterman.
Contrary Opinion
Justice Crosby offered a contrary opinion in Schwieterman that continues to receive attention in public policy discussions. He expressed concern that many consumers purchase UIM coverage expecting protection if the available liability insurance does not pay them properly.
Understanding Each Case on its Own
Each UIM claim should be evaluated based on its specific facts. It may be beneficial to:
- Obtain all insurance declarations pages
- Compare liability limits and UIM limits
- Identify every potentially responsible party
- Investigate all available insurance policies
- Confirm exhaustion requirements
- Review offset calculations carefully
- Analyze policy language
- Evaluate claim handling independently from the coverage dispute
Qualified Attorneys
Seeking legal guidance and support when involved in a California uninsured motorist claim is important to ensure you understand your responsibilities moving forward. These cases often involve complex and challenging restrictions, policy language, and evolving laws. As a result, a qualified personal injury attorney may explain the legalities of your case to ensure you are well prepared for the future.
KAASS LAW
KAASS LAW represents individuals in various types of accidents throughout California. Our attorneys can explain applicable laws, speak to insurance companies, and review the facts of your case. We understand that every case is unique and each presents its own challenges and complications. Contact KAASS LAW today to learn more and discuss your potential options moving forward.