Many wonder how much they can earn from the insurance company in a personal injury case. Well, that’s an easy and a complicated question at the same time. I always ask the certain questions, “What’s the liability policy limit” and “what is your UIM?”
A policy limit is the maximum amount that the insurance company will pay under any circumstances. In Virginia in 2022, the mandatory amount for what the policy limits should be is $30,000. Ultimately, that’s going increase over the next couple years, but right now it’s only $30,000. However, many of the policies that we see are $100,000 policies.
If you have a $100,000 policy and the insurance company has this insurance policy, then they will say that the most that they’re going to pay is $100,000 per person and up to $300,000 per accident.
For any one person, they will only pay $100,000; if you’re going get up to $300,000 per accident, multiple people must be injured. If you have three people who are injured, then each person can get up to $100,000 from that policy.
But if five people all have massive cases, then the insurance company can’t pay more than $300,000. In that case, all five people are not going get $100,000.
Underinsured Motorist Coverage
The other thing that we always look at is your underinsured motorist coverage. Underinsured motorist coverage ensures you, it’s your car insurance. It says that to the extent that the defendant is underinsured as compared to you, then this underinsured motorist coverage carrier will pay what is in excess of that policy.
In other words, if you have a liability policy for the defendant, the person who hits you has a $100,000 and you have a $100,000 policy. Then the defendant is not under insured as it relates to you, he’s insured in the same exact amount as you. If your underinsured policy was a $250,000 policy, then the defendant is under insured as compared to you by $150,000. Then your underinsured motorist coverage would pay up to $150,000 on top of the $100,000 paid by the defendant’s insurance policy for a total of $250,000 in coverage.
Now, the good news is that all of this is about to change. It will change in 2023 in our recent legislation this year through the general assembly in Virginia, enacted it to essentially eliminate the liability credit.
The underinsured motorist carrier gets a credit against their underinsured motorist coverage for what the liability policy carrier has. That credit is ultimately going away.
The minimums are also going up, which is a really good thing.
In the future when these laws kick in, the rules are going to be completely different. At that point, your car insurance company no longer gets a credit for the $50,000 liability carrier policy. At that point, you can stack those two on top of each other. In the future, there will be at least $100,000 in coverage for every car accident case that in Virginia.
That’s a really big deal. So many car accident cases come into our office and we must say that you’ve only got $25,000 in coverage. You may have a million dollar case, but the defendant is judgment proof, which means that they don’t own anything. They don’t have any assets, and they don’t have any resources. You have no way to satisfy a judgment if you were to go to court. So why go through that great expense, that great turmoil, if you’ll never get any money on the back end? If they’re judgment proof, and if they only have $25,000 in coverage, and if you only have $25,000 in coverage, then the most you can get is $25,000. Even though you sustained catastrophic injuries, that’s really a tragedy in Virginia.
Fortunately, our general assembly in Richmond and our governor agreed that that was indeed a tragedy. They’ve all agreed to change the laws to increase the amount of coverage available for every Virginia car accident case. But for right now, the UIM carrier still gets a discount for the liability carrier’s policy. In order to collect anything on your underinsured motorist coverage, your underinsured motorist policy limit must well exceed the policy limit for the defendant or the person who hits you, otherwise there is no UIM coverage.
Underinsured Motorist Coverage Exposure
This personal injury attorney thought that he had an extra $100,000 in UIM money to go after yet because he had two $50,000 policies that stacked together to make a $100,000. Well, the truth is those carriers get a credit for what the liability policy has right now. And because of that credit, that means that the UIM carrier doesn’t have any exposure.
That’s a different word that we don’t typically talk about in non-lawyers speak. But when we do talk about UIM exposure, that is the difference between the liability policy limit and the UIM policy limit. In our example, the exposure of $100,000 liability limit, $250,000 UIM limit, the exposure is $150,000. In other words, your insurance company, the underinsured motorist carrier is only required to pay an extra $150,000 maximum.
We call that UIM exposure, because that’s the only extent that they are, they are liable to you, they’re insured for this particular accident.
Over time, those experiences compound, and it becomes second nature to talk about them and to work through the scenarios in our heads.
What We Do
Our lawyers here at Osterbind Law are well versed in the policies and the laws dealing with insurance companies and how the policies work together and how they don’t work together sometimes. And we can help you walk through those processes. Even though you may have $100,000 in medical expenses, if there’s only $100,000 in coverage and you can’t go get anything from the defendant, there are no assets, there are no resources. They can’t just write you a check for $100,000. If your UIM coverage is $100,000, you get nothing from that company, nothing from that policy.
And really, that’s kind of hard to swallow. It’s difficult advice to give. I’ve had to sit down across from the table from people and tell them there is no more money to go get. Then we have to figure out, how do we pay bills? How do we work things out with just $25,000 or just $100,000 if people have catastrophic injuries? Those are very difficult conversations to have that I’ve unfortunately had to have numerous times because people don’t understand insurance and how it works together.
If you have a question about your coverage or your insurance policies or your car accident, please give us a call. Hope this has been helpful. If you have any questions, send me an email. I’d love to chat.