An Explanation of Auto Insurance Policies and Coverages
There are many different types of car accident claims. The facts of each individual accident determine what type of claim is made under what section of what insurance policy. Choosing an experienced personal injury attorney is especially important as non-lawyers, insurance agents, or general practice lawyers may not fully aware of the different coverages applicable to a given situation.
State Requirements: Bodily Injury Coverage
In Missouri the law requires that all drivers have at least $25,000 per person and $50,000 per accident of bodily injury coverage. Each policy must also carry at least $10,000 of property damage liability per accident. State law also requires that each driver have uninsured motorist coverage of at least $25,000 per person and $50,000 per accident. Uninsured Motorist coverage exists to protect drivers who are hit, as the title says, by uninsured motorists. Your insurance company cannot raise your rates if you make a claim under the uninsured motorist section of your policy.
What does the $25,000/$50,000 split mean? If multiple parties are injured and make a claim under the same state minimum policy, no one individual may collect more than $25,000 and all claimants cannot exceed $50,000. If the policy coverage is $250,000/$500,000, no individual can collect more than $250,000 and all claimants covered cannot exceed $500,000. Damages in this situation will usually be apportioned as best as possible by the finder of fact, whether that be an insurance company, jury, or judge.
In Illinois, the minimum coverage for bodily injury protection is $20,000 per person and $40,000 per accident. Each policy must carry $15,000 property damage liability. The Uninsured motorist coverage required is $20,000 per person and $40,000 per accident. All policies must have the same bodily injury coverage as uninsured motorist protection unless the insured opts for the state minimum of $40,000 in writing.
Additional Insurance Coverages:
The following coverages are contractual obligations between the insurance company and their insured. This contractual relationship can change the dynamic of how recoveries are pursued, as the insurance company owes certain duties to the people that they issued insurance policies to. If the insurance company breaches one of these duties, the claimant may no longer be looking at a negligence case against the person that caused the accident and their insurance company, but instead a bad faith claim against the insurance carrier that failed to perform an obligation that it was contractually obligated to.
A. MedPay: Medical Payments coverage, or MedPay, is an insurance policy add-on that covers an insured’s medical bills up to a pre-set amount. Payment of this coverage is not fault based, meaning the insurance company must pay these claims no matter who caused the accident. The amount of bills covered is determined by how much the insured purchases when they sign up for their policy. Most auto insurance MedPay policies are either $1,000 or $5,000.
***Will my insurance rates go up for using MedPay coverage of my own insurance?
No! Your insurance rates will not go up for utilizing the MedPay protection that
you pay for. Many clients are initially afraid to use their MedPay for fear that their
rates will go up. They are often passionate about not using it, especially if the
accident caused by someone else. Not to worry, your rates will not go up!
Purchasing MedPay coverage in Missouri proves a wise investment if you are hurt in a car accident. The full value of the Medical Payments coverage can be used toward your medical bills. This often allows you to keep more of their settlement from the third party as Missouri law prohibits subrogation (or reimbursement) of MedPay benefits against the third-party claim. In Illinois, however, MedPay does have a right of reimbursement, meaning that you will be unable to keep that portion of your settlement.
There are several different types of MedPay coverage. One that I have seen a lot of lately is excess MedPay coverage. This MedPay coverage will only pay out after the auto insurance company has received confirmation that the personal health insurance has paid out first. This confirmation can take time depending on what type of medical provider is asking for it. Getting confirmation from your health insurance that it has paid out everything it is supposed to under their policy for treating physicians bills or hospital bills can take time. If confirmation is sought from a chiropractor, this may take much less time as chiropractic treatment is not covered under a lot of health insurance plans.
An important final note on MedPay: This coverage follows the vehicle, meaning each passenger can make a claim for the full value. This is important to remember if someone is a passenger injured in a vehicle belonging to someone else. Ask the driver or the owner if they had MedPay coverage. Even if that driver was not at fault for the collision, their own insurance coverage should pick up the tab on some of your medical bills.
B. Underinsured Coverage: No policy coverage is more often confused then that of uninsured versus underinsured motorist coverages. Remember, uninsured motorist coverage is a required minimum coverage in both Missouri and Illinois. Underinsured coverage is not required and is a policy add-on. Policyholders with underinsured protection pay their insurance company premiums every month to use it. This is why it is an insurance benefit based in contract, not tort law. Underinsured claims are used in situations where the at fault party did not have enough coverage to satisfy the claim. Typically, an insurance company requires proof that the third-party claim settled for the policy limits prior to paying out any money for an underinsured motorist claim. To my knowledge there is no law directly on point for this in Missouri, so it will vary depending upon the language of each policy. Some companies will allow an underinsured claim to be opened upon proof at least $100,000 or more paid by the third-party.
It should be noted that underinsured claims cannot be made on the at-fault party’s policy. Whether the at fault party has this or MedPay on their policy is irrelevant for purposes of a client’s recovery. This is because of the contractual relationship above mentioned. For underinsured and MedPay claims, injured claimants are not beneficiaries of the other driver’s insurance policy (or contract) and therefore have no claim through the at-fault party’s policy.
From my experience, insurance companies usually fight underinsured claims pretty hard. They do this despite the legal duty they owe their insured to be fair in resolving claims presented. I believe they hope their insured will be satisfied with what the third party paid out and stop pursuing the claim.
Before an insurance company evaluates this claim, they will usually ask for proof that you settled the third-party claim against the at fault driver for the full policy limits.
In Illinois, your policy can have underinsured motorist protection only if you are insured for greater than the minimum $20,000 limits. Underinsured motorist coverage in Illinois will pay the difference between your underinsured motorist limits and the liability limits of the at-fault driver, if those limits are lower than your underinsured motorist limits.
An example of this is if you have underinsured motorist policy for $50,000 and your claim is worth $50,000 but the individual that caused the accident only has liability coverage of $25,000. Here your insurance company would be responsible for paying he difference of $25,000 ($50,000 minus $25,000 equals $25,000). In this hypothetical, if your underinsured motorist limits were $25,000 instead of $50,000, you would not be able to collect anything. In Illinois you have two years from the later of the date of the accident or date of denial of the claim to file suit against a first party insurance carrier for underinsured or uninsured motorist benefits.