Unraveling the Complexities of Multiple Coverage
Fred and Mary were longtime residents of Northern Virginia who were getting ready to retire full-time to Florida. They had fixed up their Reston home to sell and had bought a house on the Gulf Coast, their favorite vacation and bird-watching locale.
On the day of the accident Fred and Mary were headed out to pick up moving supplies. Mary was driving her station wagon with Fred in the front passenger seat. They were only four miles from their home when a driver ran a light and t-boned the passenger side door at 40 mph. Mary was able to walk away from the accident, but Fred absorbed the full impact of the crash and sustained multiple, significant injuries.
Fred was taken by ambulance to a major trauma center and diagnosed with several spinal fractures. While waiting for surgery, Fred advised his primary care physician of the accident and the physician recommended that Fred contact Peter Burnett to protect his legal interests.
Burnett & Williams’ initial investigation revealed clear cut fault on the part of the defendant driver, and likely medical expenses in excess of $100,000 for Fred’s accident related treatment. When we first sat down to talk about the economic implications of his case, Fred knew little about automobile coverage, but he was pleased to have Medicare coverage and gap (the difference between the Medicare payment and the amount charged) coverage from Aetna for the many bills he knew were coming.
In that discussion, we learned that Fred and his wife owned three automobiles, one at the new home in Florida and two in Virginia. He insured all three vehicles with the same company, but he thought he had two separate policies, one for each state. He did not know his coverage amounts, nor did he know what kinds of coverage he had. At that point, we could only tell Fred that the insurance company of the person that hit him would be first in line to pay for his damages. Without knowledge of the amount of the defendant’s coverage and the amount of his own underinsured motorist coverage (UIM), we couldn’t tell him whether he could expect full compensation for his considerable injuries. We could tell him, however, that Medicare and Aetna would expect to be reimbursed from any settlement or verdict in his case.
Further investigation established that the defendant had $100,000 in automobile liability coverage. Upon reviewing Fred’s policies we confirmed that he did in fact have two policies. The Virginia policy provided $300,000 per person and $500,000 per accident coverage for both liability (where Fred or his wife were at fault) and the same amount in UIM coverage (where, as in this case, the other person is at fault but has insufficient coverage). At that point, we knew that Fred would be covered for at least $300,000. The amount is $300,000, because Virginia law provides that the insurance company providing the UIM coverage only has to pay the difference between the defendant’s coverage ($100,000) and the UIM coverage ($300,000). Hence, at that point in the analysis, $100,000 would come from the defendant’s insurance company and $200,000 would come from Fred’s UIM coverage. We kept digging.
A review of the policy for the car in Florida showed that, fortuitously, Fred had paid a slight amount more premium for “stackable” UIM coverage on that vehicle. In short, that meant that the UIM coverage on that vehicle could be “stacked” on top of the coverage from the Virginia policy. As the secondary policy from the south also had $300,000 per person UIM coverage, Fred now had a total of $600,000 in coverage available to him from liability and UIM policies.
Lastly, Fred had purchased $5,000 per person medical payments coverage on the Virginia policy and the policy in Florida. Virginia law permitted him to stack the coverage on the two cars in Virginia, thus providing an additional $10,000 in coverage. The policy from Florida did not allow stacking this coverage. As the law of the state where the policy is written usually controls, there was no medical payment coverage available from that policy.
As the case progressed and the nature and extent of Fred’s injuries became clear, we started negotiating with the insurance companies. We knew from the outset that the defendant had no assets and that there would be no contribution from him for the payment of a settlement or verdict. In the face of clear cut fault and over $100,000 in medical bills, his insurance company agreed to pay its policy limit of $100,000. After protracted negotiations, Fred’s own insurance company agreed to pay nearly all of its $500,000 exposure ($300,000 + $300,000 less $100,000 from the defendant’s company = $500,000) and all of its $10,000 in medical payments coverage.
But the complexity of Fred’s compensation did not end there. Medicare and Aetna both claimed reimbursement under federal law. Moreover, there was the potential that Fred would be expected to “set aside” a portion of his settlement to cover future medical treatment attributable to his accident related injuries. Through negotiations with both parties, Burnett & Williams was able to avoid the “set aside” and set a reasonable reimbursement that included Medicare paying a portion of the attorney fees.
In the end, Fred put the majority of the available coverage in his pocket after his medical and legal bills were fully paid. Obviously, Fred would be in better shape if the accident had never happened, but it is interesting to note what likely would have happened if he had not sought professional legal advice. Most of the coverage available to him came as a surprise. Fred thought the defendant’s insurance company would have to pay him, but he was surprised that his own Virginia policy added $200,000 to the equation and he was shocked to learn that his Florida policy added $300,000 more. The lesson is simple: Laws covering personal injury compensation vary from state to state. Buy adequate coverage, and if you are seriously injured seek experienced legal counsel to help you navigate the compensation claim.