Introduction
There are so many different types of insurance that we find our clients often don’t understand some of the different coverages they carry. This case study illustrates how different coverages might impact a typical auto accident case.
For background, your “Liability insurance” is the coverage that pays damages to injured persons when the accident is your fault. Most people buy it with two coverage limits for an accident: per person and per accident. It is also sold in a form called single limit coverage, which we recommend.
“Uninsured coverage” (UIM) is mandatory in Virginia, and every insurance company is required by law to offer it to you in amounts equal to your liability coverage. It covers you in the event the person at fault has no insurance (uninsured coverage) or does not have enough insurance to cover your damages (underinsured coverage).
“Medical payments” is an optional coverage that covers the usual and customary costs of all accident related medical treatment, regardless of fault, and regardless of health or other insurance coverage that might apply. It can be purchased in varying amounts, but most people purchase coverage between $2,000 and $5,000 per vehicle. In Virginia, an insured person may “stack” the coverage of up to four vehicles on a policy. With stacking, an insured person with three cars with $5,000 of medical payments coverage effectively has $15,000 from that source, and this can be a big help in cases where other coverages are hitting their limits.
Case Facts
Recently we had a case that nicely illustrates the interplay of different coverages, with four different coverages from three different people contributing to the ultimate settlement. Our client, “Jessica” was 45. She was living with her sister in order to save money for a house of her own. She had 11 years of experience in medical sales and showed no signs of slowing down.
Jessica’s morning started off like any other weekday. She got in her car and headed toward one of the local hospitals. As she approached an intersection, her light turned green and she proceeded. As she was making her way through the intersection, tragedy struck. She was sideswiped by a driver crossing in the other direction and was thrown to the other side of the car by the impact. Emergency crews rushed to the scene and had to extract Jessica from the vehicle with a hydraulic cutter. The other driver, “Kevin,” claimed he did not see the red light in his direction. He was charged by the police with reckless driving.
EMS carefully transported Jessica to the local hospital. She had pain in her left shoulder, neck, and at the base of her skull. An upper and lower lumbar CT scan showed instability at the C1-C2 vertebrae, just below her skull, and signs of other trauma in her upper spine. Jessica was instructed to follow up with an orthopedic surgeon and then a neurosurgeon. The two doctors agreed that she needed a C1-C3 instrumentation and fusion, a procedure they hoped would eliminate pain and future damage by minimizing movement in her neck. After receiving the surgery, Jessica went to physical therapy for three months. She incurred nearly $130,000 in medical expenses, and she had lost income because of all of the time off.
The Challenges
Because it was established that Kevin’s negligence caused the accident, his insurance was the first one on the hook. His policy with Allstate was for $100,000, which would not be enough to cover the medical expenses and lost wages for Jessica.
Jessica was driving a work vehicle at the time of the accident. The SafeCo policy for her work vehicle had uninsured motorist coverage of $25,000. A third policy to come into play was Jessica’s personal UIM policy with Nationwide. The UIM on Jessica’s personal vehicle (that she was not driving at the time of the accident) was $100,000. A fourth policy was also available through her sister’s insurance with Geico because Jessica was living with her at the time of the accident. Her sister’s Geico UIM policy was for $100,000.
Jessica wasn’t aware of the relevance of all of these policies until we started working with her on the case. She was surprised to find that the other driver’s policy would come up short, and relieved to know that other options were available. But naturally, the final settlement wasn’t as simple as adding up the available coverages.
Solution
Kevin’s Allstate policy tendered their policy limit of $100,000, which went to Jessica, but was also “credited” to the UIM carriers, in an order determined by Virginia law. SafeCo, who insured the company vehicle Jessica was driving, was the first to receive a credit. It received $25,000 because that was the amount of its UIM policy. The second in line for credit was Nationwide, which received the remaining $75,000 in credit. Nationwide then had to pay out to Jessica the $25,000 that was left over after the $75,000 credit. Because Jessica lived with her sister at the time of the accident, under Virginia law, she was eligible for the $100,000 on that policy. Her sister’s Geico policy was not eligible for a credit because the $100,000 credit had been exhausted by the SafeCo and Nationwide policies.
Jessica received a total of $225,000 from the auto insurance companies involved. Medical payments were not available in this claim, but she was also awarded money in a workers compensation claim. Long term disability was a factor.
Fortunately for Jessica, three UIM policies provided coverage for her damages in addition to Kevin’s policy. Had Kevin’s insurance been the only policy available, it truly would have been an uphill battle for Jessica to receive adequate compensation for her medical expenses.
Conclusion
The law in personal injury cases has evolved over time to cover many possibilities that most people will never have to worry about. In simple accidents, the claims can be very straightforward, but whenever large damages are involved, it can make a world of difference to have experienced attorneys investigate the sources of compensation that may be available. In its simplest form, that’s what we do at Burnett & Williams. We use our expertise in personal injury law to explore all of the options available to our clients, and then we use all of our skills to advocate on their behalf. If you are concerned about a case and need advice, call us anytime for a no-fee consultation.