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Car Accident UM/UIM Coverage

Posted on August 6, 2022 by Brien Roche
Car Accident UM Coverage

Brien Roche

The topic of uninsured/underinsured motorist coverage in Virginia is complex.

The pertinent statute is Virginia Code § 38.2-2206.

Car Accident UM Coverage-General Principles

It begins in subsection A by saying that the policy must pay “…the insured all sums that he is legally entitled to recover as damages….” The term “all sums” becomes critical because what carriers do is try to apply certain set-offs. A set-off may be found in a clause within the policy entitled “Limits of Liability”. It also may be found in a policy provision entitled “Other Insurance”. Those types of set-offs, to the extent that they diminish the amount that the insured is legally entitled to, are invalid.

In a typical such clause the policy may say that the uninsured motorist payments are reduced by any liability payments made to a plaintiff under the same policy. Such a set-off is invalid. Nationwide v Hill 247 Va. 78 (1994).  

Premiums

One question that people may ask in terms of making a UM/UIM claim is what effect that is going to have on their premiums. Assuming the crash was not their fault, then it should not have any effect on their premiums or on any safe driver insurance plan. Virginia Code § 38.2-1905

Car Accident UM Coverage-Specific Rules

1.  What State Law Controls

Your UM policy is a contract. It is governed by the law of the state where it was issued. The vehicle covered must be principally garaged or used in Virginia at the time the policy is issued, not at a subsequent time for Virginia law to control. If the policy was delivered in another state to a resident of that state on a vehicle registered in that other state, the Virginia statute is not applicable. Grange v. Criterion, 212 Va. 753 (1972)  If the insured moves from another state to Virginia, the UM coverage may be provided if the insured has notified the insurer or agent. 

For instance the plaintiff has a policy issued in Florida. The plaintiff is involved in a crash in Virginia. The defendant’s policy limits are offered. Florida law will control how, when and with what restrictions you can accept the liability limits of the defendant. Buchanan v. Doe, 246 Va. 67 (1993)

If the carriers can’t agree that Virginia law applies, then you probably have two (2) options:  (a) accept the liability funds only when you have a settlement agreement with the UIM; (b) get all parties to sign off on a court order confirming who is released and who has any ongoing obligations.

2.  Determine the Value of Your Claim

Your status is a product of the value of the claim, less the total of liability and UIM coverage available. Therefore you must first determine the value of the claim to determine whether or not you even need to look at UIM coverage. The key distinction between the current definition of underinsured and the previous definition is that now the definition is the difference between the defendant’s available liability coverage and the plaintiff’s damages. This is capped at the total amount of UIM coverage.

3.  Determine the Liability Coverage/Situation

A.  Turn Over Every Rock to Determine Coverage.

See the blog post on this site on liability coverage to get a full grasp of where liability coverage may be found. 

Effective July 1, 2024, drivers must carry auto insurance in the amounts specified in Virginia Code § 46.2-472 and 46.2-100.

B.  Available Coverage

The statute defines the term “available for payment”. It means the amount of liability coverage reduced by the payment of any other claims arising out of the same occurrence. For instance three people are injured in one collision. Total policy is $100,000. The amount available for your plaintiff may only be $25,000. The other $75,000 may have been paid to the two other claimants. Normally in a case like that a liability carrier will not settle with  any one claimant unless they can settle with all three. 

Take a case of where there are several claimants against a 50/100 liability policy. The amount paid to your plaintiff is $33,000. Your UIM coverage is 50/100. Depending on the date of the crash and the date of the policy, this means that the liability carrier gets a credit for $33,000 and the UIM carrier owes you $17,000.

4.  Operation, Ownership, Maintenance or Use of a Motor Vehicle

There must be some causal relationship between the incident causing the injury and the defendant’s operation, ownership, maintenance or use of the uninsured/underinsured motor vehicle as a vehicle. 

i.  Motor Vehicle

A motor vehicle in Virginia is defined as being a self-propelled wheeled conveyance that does not run on rails. Hill v. State Farm, 237 Va. 148 (1989)  As such an ATV would be a motor vehicle. Also Va. Code 46.2-100 defines a motor vehicle for purposes of that title. Motor vehicle is not defined in the Virginia Family Auto Policy. 

ii.  Motor Vehicle as Motor Vehicle

If the vehicle is being used for a drive-by shooting, there probably is no coverage. Travelers Insurance Company v. LaClair, 250 Va. 368 (2002) The vehicle must be used as a vehicle. Utica Mutual v. Travelers, 223 Va. 145, 147; Fireman’s Fund v. Sleigh, 267 Va. 768 (2004) 

In Nationwide v. Smelser, 264 Va. 109 (2002), a passenger in a moving uninsured car intentionally tried to steal Mrs. Smelser’s purse as she was walking. Coverage was upheld. In Fireman’s Fund v. Sleigh, 267 Va. 768 (2004), a defendant used her uninsured vehicle as a vehicle when she intentionally slammed her driver’s side door into the plaintiff who was a meter maid writing her a parking ticket. In Utica Mutual v. Travelers, 223 Va. 145 (1982), coverage was found where an uninsured motorist deliberately ran the insured’s car off the road. 

iii. Operation, ownership, maintenance or use

An uninsured motorist walking approximately 200 feet away from the vehicle dropping a spare time from the vehicle that he is carrying which then struck another vehicle is involved in the maintenance of the vehicle. Colonial Insurance v. Rainey, 237 Va. 270 (1989)

Criminal conduct typically does not give rise to UM coverage. However in an instance where an insured was injured by being dragged and knocked to the pavement after the defendant, John Doe, reached out of his vehicle to snatch her purse did constitute use. Nationwide v. Smelser, 264 Va. 109 (2002)  An instance where the plaintiff is hit by a bottle thrown from a moving vehicle does not constitute use because there was no evidence as to who threw the bottle i.e., was it thrown by the unknown driver or someone else. 

The uninsured motorist does not need to be in contact with the uninsured vehicle to qualify the plaintiff for UM coverage. As seen in Rainey, there must be some connection to the use of the vehicle. A police officer injured in a scuffle with a motorist who he had pursued some distance away from their vehicles was not entitled to UM coverage. Simpson v. Va. Municipal Liability Pool, et al., 279 Va. 694 (2010) Loading and unloading may constitute use. London Guarantee v. CB White, 188 Va. 195 (1948)

Imagine a drunk is lying on the road. You swerve to avoid the drunk and hit an oncoming motorist. There is no negligence on your part. The oncoming motorist files a claim against their carrier. The oncoming motorist’s injury did not arise out of your ownership, maintenance or use of an uninsured or underinsured motor vehicle. Your vehicle is insured. You’re not negligent. There is no UM/UIM coverage.

A highway worker placing road signs 6-10 feet behind his truck constitutes use. A construction manager giving hand signals to a truck driver is thereby using the truck.  A job site employee using supervisor’s pickup truck warning lights as a safety vehicle constitutes use. Coverage may not apply where a person who is simply a listed driver is doing these same things. “Use” may be governed by distance from the vehicle, direction of exit path, time elapsed from exiting the vehicle. Bratton v. Selective, 290 Va. 314, 329 (2015)

A child crossing the street to board a school bus and is hit by a vehicle is deemed to be using the school bus. Newman v. Erie, 256 Va. 501 (1998)  Changing a flat tire on another person’s parked car is using the car, thereby creating second class coverage. Edwards v. GEICO, 256 Va. 128 (1998)

5.  Election of Credit

An insured does have a right to pick UM coverage that is less than the liability coverage. That selection must be signed by the insured with the appropriate box checked. Under White v. National Union Fire, 913 F.2d 165 (4th Cir. – 1990) the intent of the parties is irrelevant. The form must be returned with the lesser coverage box checked otherwise the two coverages are identical.

Under the law that went into effect on July 1, 2023, some people may be governed by a no credit situation for the liability policy. Others may be governed by a credit situation. You need to determine whether the credit applies. 

The limits of UM/UIM coverage must equal or exceed the limits required by Va. Code § 46.2-472. In addition those limits must be equal to but not exceed the limits of the liability insurance coverage provided on the policy

For policies issued prior to July 1, 2023, the credit is the total amount of liability coverage insuring the defendant subtracted from the total UIM coverage available to the plaintiff. It is that difference that is paid to the plaintiff. 

As to policies becoming effective on July 1, 2023 or later, if elected, there is no credit/offset as to the vehicle involved. However it does apply to all other vehicles. The new law only applies to crashes on or after July 1, 2023 if the policy was issued, delivered or renewed on or after July 1, 2023 but before the crash. 

The credit election only applies to motor vehicles occupied by the insured. 

A.  Taxicabs

See the blog post on this site dealing with taxicabs.

There is a special exception for the taxicab industry which says that “no credit” is the default system for UIM coverage.

6.  Is it a UM or UIM Claim?

Va. Code § 38.2-2206(K) only applies to UIM claims. It does not apply to UM claims. If the plaintiff’s claim is against an uninsured or unknown motorist, that is a UM claim. The plaintiff does not get the benefit of this Code section. Virginia Farm Bureau v. Gibson, 236 Va. 433 (1988)

7.  Is Defendant Uninsured?

When the DMV certifies that there is no liability insurance coverage, that creates a rebuttable presumption that the vehicle is uninsured. Per Va. Code  §38.2-2206(C), where the tortfeasor was driving his mother’s uninsured vehicle on business for the employer, the vehicle was not an uninsured motor vehicle because the liability coverage from the employer was available. US Fidelity v. Byrum, 2006 Va. 815 (1966)

Defendant may be uninsured for a number of reasons: 

a. Coverage is less than the Virginia minimum. If the liability coverage is from another state, you need to know what that state law mandates. Virginia has a statutory minimum of liability coverage.  That is, if you have coverage, it has to be at least that much.  In Virginia you’re not required to have coverage.  You can simply pay an uninsured motorist fee and avoid having coverage. If you don’t have the statutory minimal coverage, then you are deemed to be uninsured. For instance if your policy is $10,000, then you’re deemed to be uninsured.  That means that the plaintiff’s uninsured coverage would apply in toto.  The result of that is that if the defendant’s policy is $10,000 and the uninsured motorist coverage is $25,000, the total recoverable is $35,000. See Virginia Code § 46.2-472 and 38.2-2206.B and Reliance Ins. Co. v. Darden, 217 Va. 694 (1977)

In Reliance, the issue was whether the “deemer clause” actually increased the coverage in Virginia. You need to read the policy language to see if the deemer clause actually increases the coverage to Virginia’s minimum allowed coverage. If it doesn’t, then you have a UM claim.  If it does, then you may have a UIM claim. This little quirk will likely disappear as of July 1, 2024 when all motorists are required to purchase liability coverage.

b. The defendant is unknown. A hit and run does not require actual physical contact. In these cases, there are two classes of insureds. The first class is the named insured, resident spouse and resident relatives injured by a hit and run vehicle anywhere and in any vehicle. The second class are those who are only covered when they are injured by a hit and run vehicle while in a covered auto. 

In some instances the at-fault motorist is never identified. That is referred to as a “John Doe” case. That motorist may not be identified because the motorist simply left the scene or it may have been a non-contact incident. The other vehicle then left the scene perhaps not even knowing that there was a resulting crash. These no-contact cases must be reported promptly to the insurer or to local law enforcement.

There is no obligation to identify that unknown motorist per Mangus v. Doe, 203 Va. 518, 520 (1962). The better practice is to do so. For all you know, that unknown motorist could have $10,000,000 in coverage.  If the UM coverage is only $50,000, you may have trouble explaining your failure to pursue this.

SOL

If suit is filed then John Doe is named as a defendant in the Complaint. You have two (2) years from the date of the crash to sue John Doe. You should serve both the Clerk of the Court and the uninsured motorist carrier. You have three (3) years from the commencement of your suit against John Doe to sue your actual defendant if that person can be identified. If the John Doe collision occurred out of state then the plaintiff can sue John Doe in the Virginia county where the plaintiff resides. Virginia Code § 8.01-263(10). However in UM and UIM cases where there is no John Doe, there is no statute of limitations as far as naming the UM or UIM carrier or to serve them. Glen Falls Insurance Co. v. Stephenson, 235 Va. 420 (1988) The only requirement is they be served before judgment. 

John Doe and Others

The suit may be brought where the plaintiff resides or where the claim arose. If you have an instance where driver and passenger have switched positions in the car, then what you may have to do is sue both defendants along with John Doe. 

For John Doe collisions that occur out of state, the plaintiff can sue John Doe in Virginia in the county where the plaintiff resides. Va. Code § 8.01-263(10)

In an instance where you sue a “John Doe” and also sue an at-fault driver, if your verdict is only against John Doe, then the uninsured motorist carrier pays. If the verdict is against both John Doe and the known defendant, then the liability carrier pays. If however that verdict is over the liability limits, then the liability carrier pays its limits and the UIM carrier pays up to its limits. The UIM carrier however retains its right of subrogation so in most cases the liability carrier pays the entire amount. Harleysville v. Nationwide, 789 F.2d 272.

c. The defendant simply has no insurance. Where the insuring company denies coverage or becomes insolvent, that triggers UM coverage but not UIM coverage.

d.  There is no principal involved on whose behalf the operator is acting. 

e.  A vehicle operated on behalf of the Commonwealth met the definition of an uninsured motor vehicle. Virginia Farm Bureau v. Drewry, (King William Circuit Court, 2007).

8.  Property Damage.

The property damage deductible does not apply where the defendant is known but uninsured. However the deductible will apply to a property damage claim where the claim is a John Doe claim. Typically there is limited duration of coverage for rental situations. The at-fault driver’s liability policy however is required to pay for rental for as long as it takes to pay for the total loss of the claimant’s vehicle or to fully repair the vehicle.

9.  Determine the Amount of Coverage

UIM coverage is much more complex than is UM coverage. It applies where there is liability coverage but not enough. To determine if there is UM or UIM coverage, there are several things to look at:

A. Gradations of Insured

i.  Named Insured

The insured includes the named insured, resident spouse, resident relatives, covered vehicle users with express or implied consent of the named insured, guests in the covered vehicle, personal representatives, any person occupying or using the covered vehicle which includes those in, upon or getting in or out of.

Perhaps the easiest way to think of the first class insured is as the named insured, resident spouse and resident relatives, they are covered wherever they may be. The first class insured, when using a non-covered auto even without a reasonable belief that he is entitled to use it, is still covered. Bryant v. State Farm, 205 Va. 897 (1965)

A surviving spouse, after the death of the other spouse, continues to remain a named insured. 

The first class insureds are narrower. They are those entitled to UM coverage while in a motor vehicle or otherwise. This provides coverage to the named insured, resident spouse and resident relatives. See the blogpost dealing with resident relatives. 

What that means is that the spouse may be a named insured provided the spouse has been a resident relative within 90 days. Children may be a named insured. Even foster children may be a named insured. It makes no difference whether they’re in a motor vehicle or not in a vehicle.

As such a pedestrian would be covered. They may be in a public bus and they would be covered. They may be driving a non-owned vehicle without permission and they are covered under their policy but not under the policy of the owner. They may be in any vehicle that is uninsured. Allstate v. Meeks, 207 Va. 897 (1967) As Gerry Schwartz says, “The way to think of the named insured is that the uninsured motorist policy is actually glued to that person.” That coverage follows the person wherever that person goes.

Va. Code § 38.2-2206(B) requires that the first class insured is covered under his own policy while in a motor vehicle or otherwise. The statute does not require that the named insured have permission or even a reasonable belief of permission. 

ii. Second Class Insured.

The second class of persons under a policy is any person who uses the motor vehicle to which the policy applies with the express or implied consent of the named insured or a reasonable belief by the operator that he is a permissive user. If the operator for whatever reason becomes uninsured, then the passenger is still covered by UM, Allstate v. Jones, 261 Va. 444 (2001) as long as the vehicle was being used as a vehicle. Utica Mutual v. Travelers, 223 Va. 145 (1982)

The insured includes an operator or passenger in the insured motor vehicle. This applies also if the vehicle is either a temporary substitute auto or what is called a “non-owned auto”. As such the passenger in this circumstance is entitled to all of the same uninsured motorist coverage that the driver is entitled to. 

Persons listed as “driver”, “listed driver”, “operator” or “insured driver” may be second-class insureds even though not a relative. Smith v. USAA, 365 S.C. 50, 56 (2005)

In INA v. Perry, 204 Va. 833 (1964), a police officer was struck by an uninsured motorist while standing some distance from his cruiser. He was deemed to be a second class insured. UM coverage did not apply because he was not using or occupying the insured vehicle. In Bratton v. Selective, 290 Va. 314, 334 (2015), a highway worker was 9 feet away from his vehicle. He was a second class insured. He was deemed to be covered because he was getting out of his dump truck at the time of the collision. In Cunningham v. INA, 213 Va. 72 (1972), a man was occupying his employer’s truck and therefore entitled to UM coverage on the truck and also to UM coverage available under his personal vehicle. In Bayer v. Travelers, 221 Va. 5 (1980), the plaintiff was a passenger in his own uninsured vehicle being road tested by a garage owner and was injured due to the negligence of the operator of another uninsured vehicle. He was not entitled to UM coverage through the garage policy because he was not occupying an insured vehicle. Likewise he was not an insured under the garage policy. In Stone v. Liberty Mutual, 253 Va. 12 (1996), the plaintiff was injured by an uninsured motorist while driving his own car to deliver pizzas. The employer’s business auto policy only provided UM coverage for two vehicles listed on the policy, neither of which was the vehicle the plaintiff was driving. The liability coverage on the policy extended to vehicles that were not owned by the employer, however the UM coverage did not.

The UM endorsement excludes coverage when the insured is using a vehicle without a reasonable belief that he is entitled to do so. This however does not apply to a resident relative using a covered vehicle owned by the named insured.

Where a liability insurer properly denied coverage due to lack of permission, a passenger in the vehicle is not entitled to its UM coverage because she was a second class insured. Nationwide v. Harleysville, 203 Va. 600, 603 (1962)

Where a passenger seeking UM coverage through the policy issued to a host driver operating a non-owned vehicle, the critical factor is whether the liability provision of the host’s UM policy was triggered in the collision. McDuffy v. Progressive, 73 Va. Cir. 322 (2007)  In this case it was found that there was no UM coverage where the host driver was not at fault for the collision with the uninsured driver.

In a circumstance where the host driver and another defendant are both liable, plaintiff can make a claim for both liability coverage and UIM coverage on the same policy because the UIM claim involved a second vehicle. Dyer v. Dairyland Insurance, 267 Va. 726, 728 (2004)

The plaintiff in that case still would not have been able to use the host vehicle’s UIM coverage to calculate the extent to which the host driver was underinsured in light of Trisvan.

10.  Multiple Defendants and/or Plaintiffs

If there is more than one defendant, then your analysis needs to be on a per-vehicle basis to determine UIM coverage. Each vehicle must be analyzed to determine if it is underinsured. Nationwide v. Scott, 234 Va. 573 (1988).

Applying the language of Va. Code § 38.2-2206(B)(1), “A motor vehicle is underinsured” requires that each motor vehicle must be analyzed to determined if it is underinsured. Nationwide v. Scott, 234 Va. 573 (1988)

Where there are multiple defendants, calculating the available UIM coverage requires a comparison of the UIM coverage with the liability coverage for each defendant. USAA v. Alexander, says that UIM is calculated on a per-defendant basis rather than by combining liability coverage for all defendants and comparing that to the available UIM to create a credit. For instance claimant has UIM levels of $100,000, the liability limits are $50,000 and $30,000. The UIM coverage for the claim against the first defendant is $50,000. The UIM coverage available for claims against the second defendant is $70,000. The total between both claims is $120,000. That exceeds the per-person limit of $100,000, so the total available UIM is $100,000.

Where you have multiple claimants against the liability coverage, there may be some logic in getting the consent of the UIM carrier before settling. 

The alternative is to try to reach an agreement whereby two of the claimants take all of the liability coverage. The third claimant then goes exclusively against their UIM coverage. If the carrier is unwilling to do this, then you can file suit as to the two claimants with the third one holding off on filing or serving. That way the rights of the UIM carriers are not being prejudiced in any way.

11.  Priority

Previously Va. Code § 38.2-2206(B)(2) only applied to UIM coverage. Now it applies to both. This meant that the UM insurance on the vehicle was always primary and insurance through any other UM policy was secondary. All UM coverage that did not cover the vehicle involved in the crash shared the excess coverage on a pro-rata basis.  

Virginia Code  § 38.2-2206(B)(2) now provides that when there is more than one UM policy, the policy covering the motor vehicle which the insured is occupying pays first, the other policy on which the injured person is a named insured pays second. Then any policy to which the injured person is entitled to coverage pays third. When more than one UM carrier shares the same level of priority, their liability shall be proportioned as to their respective available uninsured motorist coverages.

A.  More Than One Policy

The statute sets forth an order of priority. That order of priority applies to instances where there is more than one policy. Any credits that are to be applied shall be likewise credited in the same order of priority. The order is the following:

  • The policy covering the vehicle carrying the plaintiff.
  • Policy covering a vehicle not involved in the crash under which the plaintiff is a named insured.
  • The policy covering a vehicle not involved in the crash under which the plaintiff is simply an insured.
  • Where there is more than one insurer providing coverage under one such priority, then their responsibility is pro-rata based upon their overall coverage. 

B.  Look at Occupied Vehicle First

Normally the coverage on that vehicle is going to be primary. The two exceptions to that are self-insured vehicles and garage vehicles.

i.  Self-Insured

To the extent that a vehicle owner is self-insured, their entire coverage may be available in spite of any statutory language allowing them to limit their coverage. See the case of VACORP v. Young, 298 Va. 490 (2020). A self-insured entity however does have certain benefits/protections:  (1) It is not required to have the same UM/UIM coverage as its liability coverage. (2) If there is another UIM carrier/entity in the case, then the self-insured entity gets the full credit under Virginia Code § 38.2-2206.B. (3) Likewise the self-insured entity gets the full credit under Virginia Code § 46.2-368 for purposes of payment. Catron v. State Farm, 255 Va. 31 (1998)

ii.  Garage-Keeper’s Policy

A garage-keeper’s policy which normally is not primary for purposes of liability may be primary for purposes of UM/UIM.

C.  Look at the Driver of the Occupied Vehicle

Where a client is injured while riding as a passenger in a vehicle operated by a driver who does not own that vehicle, the client may be entitled to UM/UIM coverage through insurance available to the driver. Nationwide v. Hill, 247 Va. 78 (1994) In that case, the plaintiff could properly make a claim for liability and UIM coverage on the same policy because UIM involved a second vehicle. This is in contrast to Trisvan. 

In determining what coverage may be available, it’s appropriate to mail a letter to the defendant requesting information concerning insurance on the vehicle, any insurance on which the defendant is the named insured and any other insurance in the defendant’s household.

When the defendant has been charged with DUI, the claimant can make a written request to the defendant’s insurance carrier to disclose the limits of coverage even when the claimant has not incurred bills and lost wages in excess of $12,500. Virginia Code § 8.01-417  Under that same Code section you can request the defendant’s current physical address and the carrier must respond within 30 days. 

D.  Look at the Plaintiff’s Home

It is possible the plaintiff may be insured under a relative’s policy. You need to identify those relatives, their policies and the amount of coverage. The issue comes down to what is a household and is the plaintiff a member of that household. In addition there may be an issue of whether the plaintiff could be a member of two households. Brogdon v. Clark, 63 Va. Cir. 85 (2003)

E.  Stacking

It used to be that stacking within a policy was allowed. That is, if there are several vehicles on the policy, then the UM coverage could be stacked one vehicle on top of the other. Now that is disallowed in most policies except where the limit of liability is ambiguous [Cunningham v. INA, 213 Va. 72 (1972), Goodville Mutual Casualty Co. v. Borror, 221 Va. 967 (1981)] or there is different UM coverage. Virginia Farm Bureau v. Williams, 278 Va. 75 (2009)What is allowed however is inter-policy stacking. For instance three minimum limits resident relative policies could be stacked to add up to $75,000 UM, resulting in $50,000 total UIM where there is only $25,000 liability.

Only the named insured, resident spouse and RR (not second-class insured) can stack. The coverage is glued to these people.  Smith v. USAA, 365 S.C. 50, 56 (2005)

The injured party is only able to stack his own UIM coverage over the UIM coverage available on the vehicle. 

The order of priority and credit after July 1, 2023 is first coverage on the occupied vehicle, coverage on other policies as a named insured and finally coverage through other policies not as a named insured. Virginia Code § 38.2-2206(B)(2)

Where there is some election issue, be sure that in looking at the UIM policy, any election required under the statute must actually be signed by the named insured. 

In USAA v. Alexander, 248 Va. 185 (1994), the defendant had $50,000 in liability coverage. The two plaintiffs had a total of $175,000 in UIM coverage from three policies. The court ruled that all of the UIM coverage was aggregated for a total amount of $175,000 which was then factored against the available liability coverage. 

F.  Is There Liability and UM Coverage from the Same Policy?

Imagine your car is insured for $50,000 liability and UM/UIM. The car is driven with permission by friend #1.  Friend #2 is a passenger and is injured. Friend #1 and UM are at fault.  Friend #2 is entitled to $50,000 liability and $50,000 UM. Likewise both liability and UIM coverage can be obtained from one policy. However a passenger in a single auto accident (rollover or plaintiff is passenger in a vehicle driven by the only at-fault driver) is not entitled to both liability and UIM coverage under the driver’s policy. Trisvan v. Agway Ins. Co., 254 Va. 416 (1997)

Those instances where there is both liability payment and a UM payment under the policy, then the set-off provision is void. That is, the liability payment does not set off the UM payment. Nationwide v. Hill, 247 Va. 78 (1994)

G.  UM and UIM Coverage from the Same Policy

As stated in GEICO v. Miles, 879 S.E.2d 908 (2022), you cannot get both. 

H. Split Limits

In cases where the UM limits are split limits, the split limits only apply where you have multiple claimants. If the split limits are 250/500 and there is only one claimant against multiple defendants, then the UM coverage is $250,000. However if you have two claimants, then each claimant could recover up to $250,000 with a total payout of no more than $500,000. If you have three claimants, then no one of them can recover more than $250,000 but the total payout could be $500,000.

With a claim worth $500,000, one claimant and two defendants, one of whom has $50,000 in liability coverage and the other has $100,000 and your UM limits are split at 250/500, then the total recovery probably would be $400,000. As to Defendant #1, you can get the $50,000 liability plus $250,000 UIM. As to Defendant #2, you can get the $100,000 liability and no UIM, since there is no UIM coverage. The total recovery under that scenario would be $400,000. 

Duty After Loss

The insured is required to give notice in cases involving no contact incidents. That notice must be prompt. There is no statutory requirement that service on the UM/UIM carrier be done promptly. 

Car Accident UM Coverage-The Role of UIM Counsel

If your case goes to trial and UIM counsel, either as part of the pre-trial proceedings or otherwise, wishes to take part independently in the proceedings, you should be prepared to raise objection to that if appropriate. In Transportation Insurance Co. v. Womack, 284 Va. 563, 565 (2012), the court said that Code § 33.2-2206.F allows a UIM carrier to defend a case at trial where the interest of the carrier and the named defendant diverge. That occurs in particular in an instance where the defendant has abandoned the case. 

If the carrier intends to present a defense independent of what the defendant has asserted, then in that instance their interests do diverge. In most instances however the interest of the two does not diverge because they both have the same interest in keeping the verdict as low as possible. In State Farm Mutual Auto Insurance Co. v. Cuffee, 248 Va. 11 (1994) and State Farm Mutual Auto Insurance Co. v. Beng, 249 Va. 165 (1995), the court dealt with instances where the interest of the carrier and the defendant clearly did diverge.

The carrier can employ counsel to file pleadings, participate in discovery, make and argue motions, examine and cross-examine witnesses, engage in argument at trial, admit liability and pursue appeals. The UM carrier is not bound by the actions of the uninsured defendant. State Farm v. Beng, 249 Va. 165 (1995)  The carrier may not tell the jury that he represents an insurance carrier or otherwise inject the topic of insurance coverage. Travelers v. Lobello, 212 Va. 534 (1972)

If UIM counsel is the only defense counsel in the case, you should pin them down as to who they represent. That is, is defense counsel only representing the interest of the carrier or are they formally representing the defendant?  What you want to avoid is defense counsel at the last minute announcing that they now represent the defendant. In particular they should under no circumstances be allowed to state that they represent the “released defendant”. That is prejudicial to the plaintiff. 

You’re not allowed to identify defense counsel as being insurance counsel. However you can come close to that. You can point out to the jury that the unknown defense has hired a lawyer. They have hired doctors to testify against the plaintiff. They have conducted discovery. Under Travelers v. Lobello, 212 Va. 534 (1972), defense counsel can say that they are here to assist the defendant. 

No Appearance

Sometimes the UIM carrier does not appear in the case. If you’ve properly released the defendant and liability carrier and served the UIM carrier, this may be a gift. You may want to simply set the case for trial, waive a jury, present your damages, get a judgment and then wait 21 days.  

Car Accident UM Coverage-Punitive Damages

Under the case of Allstate v. Wade, 265 Va. 383, 579 S.E.2d 180, (2003) the underinsured carrier must pay punitives even after settling with the liability carrier. The statute requires that the carrier pay “all sums”. However there is a possible argument that since Allstate v. Wade involved an instance where the carrier voluntarily gave up subrogation, punitives are not covered. 

Under Wade, the UIM carrier should not be allowed to tell the jury that it will pay the punitives, make any public policy argument about punitives, tell the jury that they represent the plaintiff’s UIM carrier or suggest that there is UIM coverage involved. 

If you have a viable punitive claim, you need to take the deposition of the defendant before settling.

You should probably also confirm with the UIM carrier that it agrees that punitive damages are covered. If there is any disagreement on that then you may be looking at a separate declaratory action. 

Workers’ Comp Cases

In some instances the plaintiff may be an employee of the owner or operator of a motor vehicle. If the employer paid workers’ comp benefits to the plaintiff, then the employer has a right of subrogation. If the employer likewise paid for the uninsured motorist coverage on the vehicle that the plaintiff was driving or riding in, then the workers’ comp lien may attach to that uninsured motorist coverage. Should the UIM carrier attempt to deny coverage because the vehicle is being used in employment-related activity, this is violative of the “all sums” language in Virginia Code § 38.2-2206A.

Take the case of where there are multiple workers injured in a motor vehicle crash with limited liability coverage and limited UIM coverage provided by the employer. It may be better for an injured worker to allow the other companion cases to exhaust all or most of the liability and employer UIM coverage. In this scenario even a lower UIM settlement may result in a better financial yield to the client due to the reduction in the Workers’ Compensation reimbursement. 

Contact Us

Call or contact us for a free consult. Also for more info on this issue see the Wikipedia pages and Car Accident UM Settlement.

 

 

 

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Car Accident UM/UIM Coverage

Posted on August 6, 2022 by Brien Roche
Car Accident UM Coverage

Brien Roche

The topic of uninsured/underinsured motorist coverage in Virginia is complex.

The pertinent statute is Virginia Code § 38.2-2206.

Car Accident UM Coverage-General Principles

It begins in subsection A by saying that the policy must pay “…the insured all sums that he is legally entitled to recover as damages….” The term “all sums” becomes critical because what carriers do is try to apply certain set-offs. A set-off may be found in a clause within the policy entitled “Limits of Liability”. It also may be found in a policy provision entitled “Other Insurance”. Those types of set-offs, to the extent that they diminish the amount that the insured is legally entitled to, are invalid.

In a typical such clause the policy may say that the uninsured motorist payments are reduced by any liability payments made to a plaintiff under the same policy. Such a set-off is invalid. Nationwide v Hill 247 Va. 78 (1994).  

Premiums

One question that people may ask in terms of making a UM/UIM claim is what effect that is going to have on their premiums. Assuming the crash was not their fault, then it should not have any effect on their premiums or on any safe driver insurance plan. Virginia Code § 38.2-1905

Car Accident UM Coverage-Specific Rules

1.  What State Law Controls

Your UM policy is a contract. It is governed by the law of the state where it was issued. The vehicle covered must be principally garaged or used in Virginia at the time the policy is issued, not at a subsequent time for Virginia law to control. If the policy was delivered in another state to a resident of that state on a vehicle registered in that other state, the Virginia statute is not applicable. Grange v. Criterion, 212 Va. 753 (1972)  If the insured moves from another state to Virginia, the UM coverage may be provided if the insured has notified the insurer or agent. 

For instance the plaintiff has a policy issued in Florida. The plaintiff is involved in a crash in Virginia. The defendant’s policy limits are offered. Florida law will control how, when and with what restrictions you can accept the liability limits of the defendant. Buchanan v. Doe, 246 Va. 67 (1993)

If the carriers can’t agree that Virginia law applies, then you probably have two (2) options:  (a) accept the liability funds only when you have a settlement agreement with the UIM; (b) get all parties to sign off on a court order confirming who is released and who has any ongoing obligations.

2.  Determine the Value of Your Claim

Your status is a product of the value of the claim, less the total of liability and UIM coverage available. Therefore you must first determine the value of the claim to determine whether or not you even need to look at UIM coverage. The key distinction between the current definition of underinsured and the previous definition is that now the definition is the difference between the defendant’s available liability coverage and the plaintiff’s damages. This is capped at the total amount of UIM coverage.

3.  Determine the Liability Coverage/Situation

A.  Turn Over Every Rock to Determine Coverage.

See the blog post on this site on liability coverage to get a full grasp of where liability coverage may be found. 

Effective July 1, 2024, drivers must carry auto insurance in the amounts specified in Virginia Code § 46.2-472 and 46.2-100.

B.  Available Coverage

The statute defines the term “available for payment”. It means the amount of liability coverage reduced by the payment of any other claims arising out of the same occurrence. For instance three people are injured in one collision. Total policy is $100,000. The amount available for your plaintiff may only be $25,000. The other $75,000 may have been paid to the two other claimants. Normally in a case like that a liability carrier will not settle with  any one claimant unless they can settle with all three. 

Take a case of where there are several claimants against a 50/100 liability policy. The amount paid to your plaintiff is $33,000. Your UIM coverage is 50/100. Depending on the date of the crash and the date of the policy, this means that the liability carrier gets a credit for $33,000 and the UIM carrier owes you $17,000.

4.  Operation, Ownership, Maintenance or Use of a Motor Vehicle

There must be some causal relationship between the incident causing the injury and the defendant’s operation, ownership, maintenance or use of the uninsured/underinsured motor vehicle as a vehicle. 

i.  Motor Vehicle

A motor vehicle in Virginia is defined as being a self-propelled wheeled conveyance that does not run on rails. Hill v. State Farm, 237 Va. 148 (1989)  As such an ATV would be a motor vehicle. Also Va. Code 46.2-100 defines a motor vehicle for purposes of that title. Motor vehicle is not defined in the Virginia Family Auto Policy. 

ii.  Motor Vehicle as Motor Vehicle

If the vehicle is being used for a drive-by shooting, there probably is no coverage. Travelers Insurance Company v. LaClair, 250 Va. 368 (2002) The vehicle must be used as a vehicle. Utica Mutual v. Travelers, 223 Va. 145, 147; Fireman’s Fund v. Sleigh, 267 Va. 768 (2004) 

In Nationwide v. Smelser, 264 Va. 109 (2002), a passenger in a moving uninsured car intentionally tried to steal Mrs. Smelser’s purse as she was walking. Coverage was upheld. In Fireman’s Fund v. Sleigh, 267 Va. 768 (2004), a defendant used her uninsured vehicle as a vehicle when she intentionally slammed her driver’s side door into the plaintiff who was a meter maid writing her a parking ticket. In Utica Mutual v. Travelers, 223 Va. 145 (1982), coverage was found where an uninsured motorist deliberately ran the insured’s car off the road. 

iii. Operation, ownership, maintenance or use

An uninsured motorist walking approximately 200 feet away from the vehicle dropping a spare time from the vehicle that he is carrying which then struck another vehicle is involved in the maintenance of the vehicle. Colonial Insurance v. Rainey, 237 Va. 270 (1989)

Criminal conduct typically does not give rise to UM coverage. However in an instance where an insured was injured by being dragged and knocked to the pavement after the defendant, John Doe, reached out of his vehicle to snatch her purse did constitute use. Nationwide v. Smelser, 264 Va. 109 (2002)  An instance where the plaintiff is hit by a bottle thrown from a moving vehicle does not constitute use because there was no evidence as to who threw the bottle i.e., was it thrown by the unknown driver or someone else. 

The uninsured motorist does not need to be in contact with the uninsured vehicle to qualify the plaintiff for UM coverage. As seen in Rainey, there must be some connection to the use of the vehicle. A police officer injured in a scuffle with a motorist who he had pursued some distance away from their vehicles was not entitled to UM coverage. Simpson v. Va. Municipal Liability Pool, et al., 279 Va. 694 (2010) Loading and unloading may constitute use. London Guarantee v. CB White, 188 Va. 195 (1948)

Imagine a drunk is lying on the road. You swerve to avoid the drunk and hit an oncoming motorist. There is no negligence on your part. The oncoming motorist files a claim against their carrier. The oncoming motorist’s injury did not arise out of your ownership, maintenance or use of an uninsured or underinsured motor vehicle. Your vehicle is insured. You’re not negligent. There is no UM/UIM coverage.

A highway worker placing road signs 6-10 feet behind his truck constitutes use. A construction manager giving hand signals to a truck driver is thereby using the truck.  A job site employee using supervisor’s pickup truck warning lights as a safety vehicle constitutes use. Coverage may not apply where a person who is simply a listed driver is doing these same things. “Use” may be governed by distance from the vehicle, direction of exit path, time elapsed from exiting the vehicle. Bratton v. Selective, 290 Va. 314, 329 (2015)

A child crossing the street to board a school bus and is hit by a vehicle is deemed to be using the school bus. Newman v. Erie, 256 Va. 501 (1998)  Changing a flat tire on another person’s parked car is using the car, thereby creating second class coverage. Edwards v. GEICO, 256 Va. 128 (1998)

5.  Election of Credit

An insured does have a right to pick UM coverage that is less than the liability coverage. That selection must be signed by the insured with the appropriate box checked. Under White v. National Union Fire, 913 F.2d 165 (4th Cir. – 1990) the intent of the parties is irrelevant. The form must be returned with the lesser coverage box checked otherwise the two coverages are identical.

Under the law that went into effect on July 1, 2023, some people may be governed by a no credit situation for the liability policy. Others may be governed by a credit situation. You need to determine whether the credit applies. 

The limits of UM/UIM coverage must equal or exceed the limits required by Va. Code § 46.2-472. In addition those limits must be equal to but not exceed the limits of the liability insurance coverage provided on the policy

For policies issued prior to July 1, 2023, the credit is the total amount of liability coverage insuring the defendant subtracted from the total UIM coverage available to the plaintiff. It is that difference that is paid to the plaintiff. 

As to policies becoming effective on July 1, 2023 or later, if elected, there is no credit/offset as to the vehicle involved. However it does apply to all other vehicles. The new law only applies to crashes on or after July 1, 2023 if the policy was issued, delivered or renewed on or after July 1, 2023 but before the crash. 

The credit election only applies to motor vehicles occupied by the insured. 

A.  Taxicabs

See the blog post on this site dealing with taxicabs.

There is a special exception for the taxicab industry which says that “no credit” is the default system for UIM coverage.

6.  Is it a UM or UIM Claim?

Va. Code § 38.2-2206(K) only applies to UIM claims. It does not apply to UM claims. If the plaintiff’s claim is against an uninsured or unknown motorist, that is a UM claim. The plaintiff does not get the benefit of this Code section. Virginia Farm Bureau v. Gibson, 236 Va. 433 (1988)

7.  Is Defendant Uninsured?

When the DMV certifies that there is no liability insurance coverage, that creates a rebuttable presumption that the vehicle is uninsured. Per Va. Code  §38.2-2206(C), where the tortfeasor was driving his mother’s uninsured vehicle on business for the employer, the vehicle was not an uninsured motor vehicle because the liability coverage from the employer was available. US Fidelity v. Byrum, 2006 Va. 815 (1966)

Defendant may be uninsured for a number of reasons: 

a. Coverage is less than the Virginia minimum. If the liability coverage is from another state, you need to know what that state law mandates. Virginia has a statutory minimum of liability coverage.  That is, if you have coverage, it has to be at least that much.  In Virginia you’re not required to have coverage.  You can simply pay an uninsured motorist fee and avoid having coverage. If you don’t have the statutory minimal coverage, then you are deemed to be uninsured. For instance if your policy is $10,000, then you’re deemed to be uninsured.  That means that the plaintiff’s uninsured coverage would apply in toto.  The result of that is that if the defendant’s policy is $10,000 and the uninsured motorist coverage is $25,000, the total recoverable is $35,000. See Virginia Code § 46.2-472 and 38.2-2206.B and Reliance Ins. Co. v. Darden, 217 Va. 694 (1977)

In Reliance, the issue was whether the “deemer clause” actually increased the coverage in Virginia. You need to read the policy language to see if the deemer clause actually increases the coverage to Virginia’s minimum allowed coverage. If it doesn’t, then you have a UM claim.  If it does, then you may have a UIM claim. This little quirk will likely disappear as of July 1, 2024 when all motorists are required to purchase liability coverage.

b. The defendant is unknown. A hit and run does not require actual physical contact. In these cases, there are two classes of insureds. The first class is the named insured, resident spouse and resident relatives injured by a hit and run vehicle anywhere and in any vehicle. The second class are those who are only covered when they are injured by a hit and run vehicle while in a covered auto. 

In some instances the at-fault motorist is never identified. That is referred to as a “John Doe” case. That motorist may not be identified because the motorist simply left the scene or it may have been a non-contact incident. The other vehicle then left the scene perhaps not even knowing that there was a resulting crash. These no-contact cases must be reported promptly to the insurer or to local law enforcement.

There is no obligation to identify that unknown motorist per Mangus v. Doe, 203 Va. 518, 520 (1962). The better practice is to do so. For all you know, that unknown motorist could have $10,000,000 in coverage.  If the UM coverage is only $50,000, you may have trouble explaining your failure to pursue this.

SOL

If suit is filed then John Doe is named as a defendant in the Complaint. You have two (2) years from the date of the crash to sue John Doe. You should serve both the Clerk of the Court and the uninsured motorist carrier. You have three (3) years from the commencement of your suit against John Doe to sue your actual defendant if that person can be identified. If the John Doe collision occurred out of state then the plaintiff can sue John Doe in the Virginia county where the plaintiff resides. Virginia Code § 8.01-263(10). However in UM and UIM cases where there is no John Doe, there is no statute of limitations as far as naming the UM or UIM carrier or to serve them. Glen Falls Insurance Co. v. Stephenson, 235 Va. 420 (1988) The only requirement is they be served before judgment. 

John Doe and Others

The suit may be brought where the plaintiff resides or where the claim arose. If you have an instance where driver and passenger have switched positions in the car, then what you may have to do is sue both defendants along with John Doe. 

For John Doe collisions that occur out of state, the plaintiff can sue John Doe in Virginia in the county where the plaintiff resides. Va. Code § 8.01-263(10)

In an instance where you sue a “John Doe” and also sue an at-fault driver, if your verdict is only against John Doe, then the uninsured motorist carrier pays. If the verdict is against both John Doe and the known defendant, then the liability carrier pays. If however that verdict is over the liability limits, then the liability carrier pays its limits and the UIM carrier pays up to its limits. The UIM carrier however retains its right of subrogation so in most cases the liability carrier pays the entire amount. Harleysville v. Nationwide, 789 F.2d 272.

c. The defendant simply has no insurance. Where the insuring company denies coverage or becomes insolvent, that triggers UM coverage but not UIM coverage.

d.  There is no principal involved on whose behalf the operator is acting. 

e.  A vehicle operated on behalf of the Commonwealth met the definition of an uninsured motor vehicle. Virginia Farm Bureau v. Drewry, (King William Circuit Court, 2007).

8.  Property Damage.

The property damage deductible does not apply where the defendant is known but uninsured. However the deductible will apply to a property damage claim where the claim is a John Doe claim. Typically there is limited duration of coverage for rental situations. The at-fault driver’s liability policy however is required to pay for rental for as long as it takes to pay for the total loss of the claimant’s vehicle or to fully repair the vehicle.

9.  Determine the Amount of Coverage

UIM coverage is much more complex than is UM coverage. It applies where there is liability coverage but not enough. To determine if there is UM or UIM coverage, there are several things to look at:

A. Gradations of Insured

i.  Named Insured

The insured includes the named insured, resident spouse, resident relatives, covered vehicle users with express or implied consent of the named insured, guests in the covered vehicle, personal representatives, any person occupying or using the covered vehicle which includes those in, upon or getting in or out of.

Perhaps the easiest way to think of the first class insured is as the named insured, resident spouse and resident relatives, they are covered wherever they may be. The first class insured, when using a non-covered auto even without a reasonable belief that he is entitled to use it, is still covered. Bryant v. State Farm, 205 Va. 897 (1965)

A surviving spouse, after the death of the other spouse, continues to remain a named insured. 

The first class insureds are narrower. They are those entitled to UM coverage while in a motor vehicle or otherwise. This provides coverage to the named insured, resident spouse and resident relatives. See the blogpost dealing with resident relatives. 

What that means is that the spouse may be a named insured provided the spouse has been a resident relative within 90 days. Children may be a named insured. Even foster children may be a named insured. It makes no difference whether they’re in a motor vehicle or not in a vehicle.

As such a pedestrian would be covered. They may be in a public bus and they would be covered. They may be driving a non-owned vehicle without permission and they are covered under their policy but not under the policy of the owner. They may be in any vehicle that is uninsured. Allstate v. Meeks, 207 Va. 897 (1967) As Gerry Schwartz says, “The way to think of the named insured is that the uninsured motorist policy is actually glued to that person.” That coverage follows the person wherever that person goes.

Va. Code § 38.2-2206(B) requires that the first class insured is covered under his own policy while in a motor vehicle or otherwise. The statute does not require that the named insured have permission or even a reasonable belief of permission. 

ii. Second Class Insured.

The second class of persons under a policy is any person who uses the motor vehicle to which the policy applies with the express or implied consent of the named insured or a reasonable belief by the operator that he is a permissive user. If the operator for whatever reason becomes uninsured, then the passenger is still covered by UM, Allstate v. Jones, 261 Va. 444 (2001) as long as the vehicle was being used as a vehicle. Utica Mutual v. Travelers, 223 Va. 145 (1982)

The insured includes an operator or passenger in the insured motor vehicle. This applies also if the vehicle is either a temporary substitute auto or what is called a “non-owned auto”. As such the passenger in this circumstance is entitled to all of the same uninsured motorist coverage that the driver is entitled to. 

Persons listed as “driver”, “listed driver”, “operator” or “insured driver” may be second-class insureds even though not a relative. Smith v. USAA, 365 S.C. 50, 56 (2005)

In INA v. Perry, 204 Va. 833 (1964), a police officer was struck by an uninsured motorist while standing some distance from his cruiser. He was deemed to be a second class insured. UM coverage did not apply because he was not using or occupying the insured vehicle. In Bratton v. Selective, 290 Va. 314, 334 (2015), a highway worker was 9 feet away from his vehicle. He was a second class insured. He was deemed to be covered because he was getting out of his dump truck at the time of the collision. In Cunningham v. INA, 213 Va. 72 (1972), a man was occupying his employer’s truck and therefore entitled to UM coverage on the truck and also to UM coverage available under his personal vehicle. In Bayer v. Travelers, 221 Va. 5 (1980), the plaintiff was a passenger in his own uninsured vehicle being road tested by a garage owner and was injured due to the negligence of the operator of another uninsured vehicle. He was not entitled to UM coverage through the garage policy because he was not occupying an insured vehicle. Likewise he was not an insured under the garage policy. In Stone v. Liberty Mutual, 253 Va. 12 (1996), the plaintiff was injured by an uninsured motorist while driving his own car to deliver pizzas. The employer’s business auto policy only provided UM coverage for two vehicles listed on the policy, neither of which was the vehicle the plaintiff was driving. The liability coverage on the policy extended to vehicles that were not owned by the employer, however the UM coverage did not.

The UM endorsement excludes coverage when the insured is using a vehicle without a reasonable belief that he is entitled to do so. This however does not apply to a resident relative using a covered vehicle owned by the named insured.

Where a liability insurer properly denied coverage due to lack of permission, a passenger in the vehicle is not entitled to its UM coverage because she was a second class insured. Nationwide v. Harleysville, 203 Va. 600, 603 (1962)

Where a passenger seeking UM coverage through the policy issued to a host driver operating a non-owned vehicle, the critical factor is whether the liability provision of the host’s UM policy was triggered in the collision. McDuffy v. Progressive, 73 Va. Cir. 322 (2007)  In this case it was found that there was no UM coverage where the host driver was not at fault for the collision with the uninsured driver.

In a circumstance where the host driver and another defendant are both liable, plaintiff can make a claim for both liability coverage and UIM coverage on the same policy because the UIM claim involved a second vehicle. Dyer v. Dairyland Insurance, 267 Va. 726, 728 (2004)

The plaintiff in that case still would not have been able to use the host vehicle’s UIM coverage to calculate the extent to which the host driver was underinsured in light of Trisvan.

10.  Multiple Defendants and/or Plaintiffs

If there is more than one defendant, then your analysis needs to be on a per-vehicle basis to determine UIM coverage. Each vehicle must be analyzed to determine if it is underinsured. Nationwide v. Scott, 234 Va. 573 (1988).

Applying the language of Va. Code § 38.2-2206(B)(1), “A motor vehicle is underinsured” requires that each motor vehicle must be analyzed to determined if it is underinsured. Nationwide v. Scott, 234 Va. 573 (1988)

Where there are multiple defendants, calculating the available UIM coverage requires a comparison of the UIM coverage with the liability coverage for each defendant. USAA v. Alexander, says that UIM is calculated on a per-defendant basis rather than by combining liability coverage for all defendants and comparing that to the available UIM to create a credit. For instance claimant has UIM levels of $100,000, the liability limits are $50,000 and $30,000. The UIM coverage for the claim against the first defendant is $50,000. The UIM coverage available for claims against the second defendant is $70,000. The total between both claims is $120,000. That exceeds the per-person limit of $100,000, so the total available UIM is $100,000.

Where you have multiple claimants against the liability coverage, there may be some logic in getting the consent of the UIM carrier before settling. 

The alternative is to try to reach an agreement whereby two of the claimants take all of the liability coverage. The third claimant then goes exclusively against their UIM coverage. If the carrier is unwilling to do this, then you can file suit as to the two claimants with the third one holding off on filing or serving. That way the rights of the UIM carriers are not being prejudiced in any way.

11.  Priority

Previously Va. Code § 38.2-2206(B)(2) only applied to UIM coverage. Now it applies to both. This meant that the UM insurance on the vehicle was always primary and insurance through any other UM policy was secondary. All UM coverage that did not cover the vehicle involved in the crash shared the excess coverage on a pro-rata basis.  

Virginia Code  § 38.2-2206(B)(2) now provides that when there is more than one UM policy, the policy covering the motor vehicle which the insured is occupying pays first, the other policy on which the injured person is a named insured pays second. Then any policy to which the injured person is entitled to coverage pays third. When more than one UM carrier shares the same level of priority, their liability shall be proportioned as to their respective available uninsured motorist coverages.

A.  More Than One Policy

The statute sets forth an order of priority. That order of priority applies to instances where there is more than one policy. Any credits that are to be applied shall be likewise credited in the same order of priority. The order is the following:

  • The policy covering the vehicle carrying the plaintiff.
  • Policy covering a vehicle not involved in the crash under which the plaintiff is a named insured.
  • The policy covering a vehicle not involved in the crash under which the plaintiff is simply an insured.
  • Where there is more than one insurer providing coverage under one such priority, then their responsibility is pro-rata based upon their overall coverage. 

B.  Look at Occupied Vehicle First

Normally the coverage on that vehicle is going to be primary. The two exceptions to that are self-insured vehicles and garage vehicles.

i.  Self-Insured

To the extent that a vehicle owner is self-insured, their entire coverage may be available in spite of any statutory language allowing them to limit their coverage. See the case of VACORP v. Young, 298 Va. 490 (2020). A self-insured entity however does have certain benefits/protections:  (1) It is not required to have the same UM/UIM coverage as its liability coverage. (2) If there is another UIM carrier/entity in the case, then the self-insured entity gets the full credit under Virginia Code § 38.2-2206.B. (3) Likewise the self-insured entity gets the full credit under Virginia Code § 46.2-368 for purposes of payment. Catron v. State Farm, 255 Va. 31 (1998)

ii.  Garage-Keeper’s Policy

A garage-keeper’s policy which normally is not primary for purposes of liability may be primary for purposes of UM/UIM.

C.  Look at the Driver of the Occupied Vehicle

Where a client is injured while riding as a passenger in a vehicle operated by a driver who does not own that vehicle, the client may be entitled to UM/UIM coverage through insurance available to the driver. Nationwide v. Hill, 247 Va. 78 (1994) In that case, the plaintiff could properly make a claim for liability and UIM coverage on the same policy because UIM involved a second vehicle. This is in contrast to Trisvan. 

In determining what coverage may be available, it’s appropriate to mail a letter to the defendant requesting information concerning insurance on the vehicle, any insurance on which the defendant is the named insured and any other insurance in the defendant’s household.

When the defendant has been charged with DUI, the claimant can make a written request to the defendant’s insurance carrier to disclose the limits of coverage even when the claimant has not incurred bills and lost wages in excess of $12,500. Virginia Code § 8.01-417  Under that same Code section you can request the defendant’s current physical address and the carrier must respond within 30 days. 

D.  Look at the Plaintiff’s Home

It is possible the plaintiff may be insured under a relative’s policy. You need to identify those relatives, their policies and the amount of coverage. The issue comes down to what is a household and is the plaintiff a member of that household. In addition there may be an issue of whether the plaintiff could be a member of two households. Brogdon v. Clark, 63 Va. Cir. 85 (2003)

E.  Stacking

It used to be that stacking within a policy was allowed. That is, if there are several vehicles on the policy, then the UM coverage could be stacked one vehicle on top of the other. Now that is disallowed in most policies except where the limit of liability is ambiguous [Cunningham v. INA, 213 Va. 72 (1972), Goodville Mutual Casualty Co. v. Borror, 221 Va. 967 (1981)] or there is different UM coverage. Virginia Farm Bureau v. Williams, 278 Va. 75 (2009)What is allowed however is inter-policy stacking. For instance three minimum limits resident relative policies could be stacked to add up to $75,000 UM, resulting in $50,000 total UIM where there is only $25,000 liability.

Only the named insured, resident spouse and RR (not second-class insured) can stack. The coverage is glued to these people.  Smith v. USAA, 365 S.C. 50, 56 (2005)

The injured party is only able to stack his own UIM coverage over the UIM coverage available on the vehicle. 

The order of priority and credit after July 1, 2023 is first coverage on the occupied vehicle, coverage on other policies as a named insured and finally coverage through other policies not as a named insured. Virginia Code § 38.2-2206(B)(2)

Where there is some election issue, be sure that in looking at the UIM policy, any election required under the statute must actually be signed by the named insured. 

In USAA v. Alexander, 248 Va. 185 (1994), the defendant had $50,000 in liability coverage. The two plaintiffs had a total of $175,000 in UIM coverage from three policies. The court ruled that all of the UIM coverage was aggregated for a total amount of $175,000 which was then factored against the available liability coverage. 

F.  Is There Liability and UM Coverage from the Same Policy?

Imagine your car is insured for $50,000 liability and UM/UIM. The car is driven with permission by friend #1.  Friend #2 is a passenger and is injured. Friend #1 and UM are at fault.  Friend #2 is entitled to $50,000 liability and $50,000 UM. Likewise both liability and UIM coverage can be obtained from one policy. However a passenger in a single auto accident (rollover or plaintiff is passenger in a vehicle driven by the only at-fault driver) is not entitled to both liability and UIM coverage under the driver’s policy. Trisvan v. Agway Ins. Co., 254 Va. 416 (1997)

Those instances where there is both liability payment and a UM payment under the policy, then the set-off provision is void. That is, the liability payment does not set off the UM payment. Nationwide v. Hill, 247 Va. 78 (1994)

G.  UM and UIM Coverage from the Same Policy

As stated in GEICO v. Miles, 879 S.E.2d 908 (2022), you cannot get both. 

H. Split Limits

In cases where the UM limits are split limits, the split limits only apply where you have multiple claimants. If the split limits are 250/500 and there is only one claimant against multiple defendants, then the UM coverage is $250,000. However if you have two claimants, then each claimant could recover up to $250,000 with a total payout of no more than $500,000. If you have three claimants, then no one of them can recover more than $250,000 but the total payout could be $500,000.

With a claim worth $500,000, one claimant and two defendants, one of whom has $50,000 in liability coverage and the other has $100,000 and your UM limits are split at 250/500, then the total recovery probably would be $400,000. As to Defendant #1, you can get the $50,000 liability plus $250,000 UIM. As to Defendant #2, you can get the $100,000 liability and no UIM, since there is no UIM coverage. The total recovery under that scenario would be $400,000. 

Duty After Loss

The insured is required to give notice in cases involving no contact incidents. That notice must be prompt. There is no statutory requirement that service on the UM/UIM carrier be done promptly. 

Car Accident UM Coverage-The Role of UIM Counsel

If your case goes to trial and UIM counsel, either as part of the pre-trial proceedings or otherwise, wishes to take part independently in the proceedings, you should be prepared to raise objection to that if appropriate. In Transportation Insurance Co. v. Womack, 284 Va. 563, 565 (2012), the court said that Code § 33.2-2206.F allows a UIM carrier to defend a case at trial where the interest of the carrier and the named defendant diverge. That occurs in particular in an instance where the defendant has abandoned the case. 

If the carrier intends to present a defense independent of what the defendant has asserted, then in that instance their interests do diverge. In most instances however the interest of the two does not diverge because they both have the same interest in keeping the verdict as low as possible. In State Farm Mutual Auto Insurance Co. v. Cuffee, 248 Va. 11 (1994) and State Farm Mutual Auto Insurance Co. v. Beng, 249 Va. 165 (1995), the court dealt with instances where the interest of the carrier and the defendant clearly did diverge.

The carrier can employ counsel to file pleadings, participate in discovery, make and argue motions, examine and cross-examine witnesses, engage in argument at trial, admit liability and pursue appeals. The UM carrier is not bound by the actions of the uninsured defendant. State Farm v. Beng, 249 Va. 165 (1995)  The carrier may not tell the jury that he represents an insurance carrier or otherwise inject the topic of insurance coverage. Travelers v. Lobello, 212 Va. 534 (1972)

If UIM counsel is the only defense counsel in the case, you should pin them down as to who they represent. That is, is defense counsel only representing the interest of the carrier or are they formally representing the defendant?  What you want to avoid is defense counsel at the last minute announcing that they now represent the defendant. In particular they should under no circumstances be allowed to state that they represent the “released defendant”. That is prejudicial to the plaintiff. 

You’re not allowed to identify defense counsel as being insurance counsel. However you can come close to that. You can point out to the jury that the unknown defense has hired a lawyer. They have hired doctors to testify against the plaintiff. They have conducted discovery. Under Travelers v. Lobello, 212 Va. 534 (1972), defense counsel can say that they are here to assist the defendant. 

No Appearance

Sometimes the UIM carrier does not appear in the case. If you’ve properly released the defendant and liability carrier and served the UIM carrier, this may be a gift. You may want to simply set the case for trial, waive a jury, present your damages, get a judgment and then wait 21 days.  

Car Accident UM Coverage-Punitive Damages

Under the case of Allstate v. Wade, 265 Va. 383, 579 S.E.2d 180, (2003) the underinsured carrier must pay punitives even after settling with the liability carrier. The statute requires that the carrier pay “all sums”. However there is a possible argument that since Allstate v. Wade involved an instance where the carrier voluntarily gave up subrogation, punitives are not covered. 

Under Wade, the UIM carrier should not be allowed to tell the jury that it will pay the punitives, make any public policy argument about punitives, tell the jury that they represent the plaintiff’s UIM carrier or suggest that there is UIM coverage involved. 

If you have a viable punitive claim, you need to take the deposition of the defendant before settling.

You should probably also confirm with the UIM carrier that it agrees that punitive damages are covered. If there is any disagreement on that then you may be looking at a separate declaratory action. 

Workers’ Comp Cases

In some instances the plaintiff may be an employee of the owner or operator of a motor vehicle. If the employer paid workers’ comp benefits to the plaintiff, then the employer has a right of subrogation. If the employer likewise paid for the uninsured motorist coverage on the vehicle that the plaintiff was driving or riding in, then the workers’ comp lien may attach to that uninsured motorist coverage. Should the UIM carrier attempt to deny coverage because the vehicle is being used in employment-related activity, this is violative of the “all sums” language in Virginia Code § 38.2-2206A.

Take the case of where there are multiple workers injured in a motor vehicle crash with limited liability coverage and limited UIM coverage provided by the employer. It may be better for an injured worker to allow the other companion cases to exhaust all or most of the liability and employer UIM coverage. In this scenario even a lower UIM settlement may result in a better financial yield to the client due to the reduction in the Workers’ Compensation reimbursement. 

Contact Us

Call or contact us for a free consult. Also for more info on this issue see the Wikipedia pages and Car Accident UM Settlement.

 

 

 

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