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Understanding What Coverage under Which Policy Applies to Whom

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Personal Injury

Like many written agreements, the contractual language and provisions contained within an auto policy can be difficult to interpret, especially for the average person unfamiliar with complex insurance and legal terminology. The Gainesville Auto Collision Attorneys of the Law Office of Alba & Yochim P.A., provide the following to assist clients in understanding what coverage under which policy applies to whom. For explanatory purposes, it may be helpful to consider a hypothetical scenario.

In reading the following example of an automobile collision, note that BI = Bodily Injury coverage; PIP = Personal Injury Protection; UIM = Uninsured/Underinsured Motorist Coverage; and PD = Property Damage:

A motorist is insured under an auto insurance policy for $100,000/ $300,000 in BI, per person/per accident respectively, and $50,000 in PD, with a UIM coverage matching BI limits. As required by law, the policy includes $10,000 in PIP, but the motorist has also elected to include additional coverage for medical payments. While this insured motorist operates their vehicle in a lawful manner, they are severely injured after being struck by the negligent driver of an automobile insured under a policy meeting minimum coverage requirements under Florida Law, with additional coverage for BI in the minimum amount of $10,000 per person and $20,000 for accident. The victim’s damages are estimated at approximately $100,000. Liability has been established assigning 100% fault to the negligent motorist.

Given the hypothetical provided, a logical inquiry is—what coverage under what policy applies to whom? In this case, 80% of the first $10,000 for medical treatment is covered under the PIP included within the victim’s own auto insurance policy. Because this motorist has also included coverage for medical payments, the remaining 20% not covered by PIP will be covered as well.

It is important to know, that under Florida law, unless the negligent party was completely uninsured, your own insurance company will have no right to recover amounts paid out under the victim’s PIP coverage. However, insurance companies generally have a right to seek compensation from the negligent driver for monies disbursed under the victim’s medical payments coverage.

Thereafter, compensation for bodily harm would be obtained from the bodily injury coverage (BI) held by the at-fault party. However, because the policy held by the negligent driver, in the hypothetical provided, includes only $10,000/$20,000 in BI, the victim can generally only recover $10,000 under such coverage, for injuries sustained as a result of the accident.

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Prior to seeking additional compensation from the victim’s UIM coverage, written notice of the intent to settle with the negligent party’s insurer for BI policy limits must be provided to the UIM carrier, upon which they have 30 days to respond. If the UIM carrier approves the settlement at with the BI carrier, then he victim can then proceed with their claim against the UIM carrier. However, if the UIM carrier rejects the settlement, and therefore elects to preserve their subrogation rights, the UIM carrier must pay to the victim the amount proposed in the settlement (i.e. BI policy limits).

Given the extent of the victim’s injuries in the hypothetical provided, and the lack of coverage held by the negligent driver, it is easy to see why the victim’s decision to include UIM coverage was clearly beneficial. Absent such coverage, the victim’s uncompensated damages could have easily been over $80,000. Compare this figure with the minor policy rate increase associated with carrying UIM coverage. Because many drivers in Florida carry only basic or minimum coverage, the preferred option may be to protect ourselves by having additional coverage available within our own auto insurance policies.

Consider the hypothetical provided, but in the reverse—the parties hold the same policies, but the victim in the previous example is found to be the at-fault party in the accident. Damages caused to the victim as a result of the negligent driver are estimated at $100,000. Because the at-fault insured has elected to carry policy coverage for BI in the amount of $100,000/$300,000, and the victim has no UIM coverage, the BI coverage carried by the negligent motorist provides a source of compensation for the victim. As a result of including additional coverage, the negligent motorist, in this scenario, has reduced the risk of being held personally liable in a civil action brought forth by the victim.