Articles Posted in Uninsured Motorist

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Two companion uninsured/underinsured motorist cases out of Cecil County were decided by the Maryland Court of Appeals last month.  The take home message for Maryland lawyers handling uninsured motorist cases: if you don’t follow the rules by settling with the underlying carrier, the court is not going to let you off the mat.  It is the ultimate in form over substance.  I disagree with the law, but I can’t quibble with the court’s 6-1 decision.  Really? Insurance companies should not be trying to eviscerate insurance agreements with their own clients, because their lawyers screwed up.

Both cases, Woznicki v. General Insurance Company and Morse v. Erie Insurance Exchange involved the typical scenario; in which the tortfeasor’s liability insurance tenders the policy and the plaintiff’s attorney accepts, while intending to make an uninsured motorist claim.  This is a special set of facts. In this case, the insured’s UM policy explicitly stated that they had to bless any settlement with the tortfeasor’s liability insurance carrier  — or pony up the policy themselves —  to activate the UM coverage after a release was signed.

The Cases

In the first case, Woznicki, the victim had GEICO UM coverage.  The insurance company required notification and consent from GEICO of any settlement that would exhaust the tortfeasor’s liability insurance limits.  Plaintiff sues the other driver, who agrees to settle the claim for policy limits.

Here’s the problem: on the same day she settles, her attorney sends a letter to GEICO saying that the tortfeasor had limited coverage, nothing else. A few months after the settlement with the liability carrier (Nationwide), they allegedly received oral permission from GEICO to settle the claim via phone call from a claims adjuster.  This is not the law.  But they follow up with a letter that says that the claim against Nationwide has been “tendered,” and ask for permission to settle the claim that they already settled.


Ask for forgiveness, not permission right?  Coffee mug adages can let you down.  GEICO rejects their letter, claiming that the “consent to settle” term of their policy was not followed, thus they cannot provide any UM coverage. Plaintiff filed a breach of insurance contract.  GEICO successfully moves for summary judgment.

In granting summary judgment, the trial judge makes three important points which serve as the bases of the appeal: 1) The terms of the insurance policy and Maryland law were not adhered to by the plaintiff (by excluding GEICO from settlement negotiations with Nationwide); 2) The alleged phone conversation between Plaintiff #1’s attorney and the GEICO adjuster did not waive GEICO’s right to be informed of the settlement and 3) GEICO did not have to show prejudice caused by Plaintiff #1 failing to obtain consent to settle the case against the liability carrier.

The second case, Morse, is similar except that her attorney sent the request for permission to settle to the wrong address. While this blunder was getting sorted out, the Plaintiff became impatient and accepted the full value of the tortfeasor’s liability coverage. Once again, the UM carrier (Erie in this case) denied UM coverage and won at trial and again on appeal when COSA said that “obtaining consent to settle is not the equivalent of providing notice,” only the latter of which was done here.

Compliance with MD Settlement Procedure

Judge Greene wrote the majority opinion for a court that ruled in favor of the GEICO/Erie.  After a brief history lesson about UM coverage in Maryland — one that is worth reading —  the court dove into what this case is really about: compliance with two insurance statutes and the rationales behind them. Judge Greene was up front about the purpose of the UM insurance statutes: to protect an injured person’s right to make a claim against the liability carrier AND the UM carrier, something that was often difficult prior to the enactment of the two statutes at issue here. Those statutes, Md. Code Insurance, § 19-511 and § 19-110, lay out the procedure that Plaintiffs  should have adhered to when settling their liability claims. Namely, notifying and obtaining consent from the UM carrier before accepting a settlement from the liability carrier.

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Uninsured motorist insurance is so counterintuitive for personal injury victims. First, it is hard to get your mind around the idea that your own insurance company will pay for the harm suffered in an accident. Still, people get over that one pretty quickly because they are just happy someone else is standing by the claim.insurance3

But, where victims become particularly incensed is in wrongful death uninsured motorist cases where there is a liability dispute. Details of Maryland uninsured motorist laws are hard to absorb when all you can see is your insurance company representing the uninsured or underinsured person who killed your child/spouse/sibling.

This post here – “My Sister Paid Progressive Insurance to Defend Her Killer in Court” – does a wonderful job of articulating this anger and frustration.

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As the Maryland appellate courts continue their summer of personal injury enuni, we turn our attention to a uninsured motorist case issued by the Supreme Court of Rhode Island, in New London County Mutual Insurance Company v. Karoline Fontaine. This opinion works through some issues about uninsured policy provisions, something we find ourselves doing quite frequently at Miller & Zois in our sometimes mad quest to find insurance coverage to get our clients compensated for their injuries.

The facts on this one are both simple and tragic. A husband and wife were on their motorcycle, and got into a collision. As is too often the case in motorcycle accidents, the husband was killed. The accident was not the couple’s fault, which is also often the case in fatal motorcycle accidents. But, of course, that is little consolation to the man’s family.

Neither the other vehicle nor its driver was insured. The motorcycle was insured by a policy with Foremost Insurance Company, and Foremost paid the full $100,000.00 under the uninsured motorist provision. Continue reading →

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The purpose of uninsured motorist coverage – which most of us blindly have because our state requires it – is for protection in the event that we get hit by a driver with no insurance or not enough insurance to provide compensation for our injuries. Most uninsured motorist policies compensate the victim for any amount, within the policy limits, that would have been recoverable from the at fault driver as money damages resulting from a car collision.

What happens when your client is on a motorcycle that is not listed on your insurance policy? Does your uninsured motorist coverage kick in? This issue is usually framed by breaking down the language of the uninsured motorist agreement that considers a motorcycle to be an excluded vehicle. But the analysis does motorcycle2not end there. Some states – Maryland is a prime example that I will get to in a second – are willing to rewrite the terms of an insurance policy to meet public policy objectives. This is done either by judicial fiat or by the state’s uninsured motorist statutory scheme.

So outside of Maryland, Plaintiffs’ lawyer in these cases argue that the state uninsured motorist laws provides protection that extends not just to the vehicle but to the person. Accordingly, this argument goes, UM coverage is broadly construed to cover all motor vehicle accidents. The insurance companies, argue, on the other hand, that its insured should not be able to have their cake and eat it too by doing someone inherently unsafe while not paying for the coverage. There is merit to both arguments. Continue reading →

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The Governor signed yesterday a bill that allows auto insurance companies in cases where the at-fault driver has insufficient insurance coverage to consent to marylandstatedomesettlements against the at fault driver without (1) limiting their right to raise any issue relating to liability or damages in an action against the insurer; and (2) admitting as to any issue raised in an action against the insurer.

The Maryland General Assembly made history with the bill: nobody is mad. Insurance companies are ecstatic and trial lawyers are largely indifferent.

You can read about the genesis of this bill here.

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There is a bill pending in the Maryland Senate to overturn the Maryland Court of Appeals opinion in Maurer v. Pennsylvania National Mutual Casualty Insurance six years ago. This bill allows car insurance companies who have underinsured exposure, because the at fault driver has insufficient insurance coverage, to consent to settlements against the at fault driver without (1) limiting their right to raise any issue relating to liability or damages in an action against the insurer; and (2) admitting as to any issue raised in an action against the insurer.

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Our Rod Gaston is giving a lecture on Advanced Uninsured/Underinsured Motorist Law at the Treemont Grand Hotel in Baltimore on Friday, March 9, 2012. You can get information here.

Rod is going to provide information both on Maryland uninsured motorist law and how to use that law to maximize the value of serious car accident claims in Maryland. If you can’t make it, you can also order the audio CD and course materials.

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I had a prospective client call in a few weeks ago with an interesting uninsured motorist waiver issue that I thought I would share.

To keep the world simple, Maryland law requires that insurance companies match up their insured liability coverage with their uninsured motorist coverage. But it allows for an exception in those cases where the insurance offers uninsured/underinsured motorist coverage in the same amount as their liability coverage and the insured signs a waiver that its liability coverage will exceed its UM coverage. This is an odd bet for the insured who is more worried about getting sued and not having enough coverage then making sure they are protected when they get in a car crash that is caused by someone who had no or little insurance. But, I don’t disagree that in the free market economy (I’m talking to you, Mitt), people ought to have the right to make this odd choice as long as it is a knowing and


intelligent waiver. I think the law makes sense.

But what about these waivers? In this case, I have a high wage earner who gets into an accident with a driver with a minimum limits policy. He has a $300,000 liability policy that would clearly be offered if his uninsured motorist coverage mirrored the liability policy. Instead, he has the minimum $30,000 UM policy. Continue reading →

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Mealy’s reports on Jones v. Penn National, a North Carolina uninsured motorist case where the Plaintiff brought a bad faith claim against Penn National, the underinsured motorist carrier, in a case where the at fault defendant – insured by Allstate, naturally – did not tender their policy. The court said that Defendant has no obligation to offer UIM coverage before the exhaustion of liability insurance. I think a Maryland court would make the same ruling.justice

That’s the nutshell. You can stop there. Perhaps I could interest you in an overview of uninsured motorist coverage. Is that something you might be interested in? (Entourage devotees enjoy the joke. Everyone else looks annoyed.) Or we can break it down a little further.

Plaintiff gets into a serious accident. The defendant driver is killed. Allstate, who insured the defendant, offered $7,500 of its $30,000 policy. Plaintiff takes the case to verdict and gets a $185,000 verdict. Typical Allstate.

Plaintiff then brought a bad faith claim invoking North Carolina’s UIM statute and its Unfair and Deceptive Trade Practices Act. Maryland has a similar law. Plaintiff’s lawyers claimed that Penn National was bound by a statutory duty — following the car accident and before Allstate tendered its policy – to evaluate the case fairly and honestly. In other words, they are arguing that Penn National is not as dumb as Allstate and knew the claim was worth more. Continue reading →

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This post was supposed to be about Medicare set-asides but I started with such a long intro about the psychology of claims adjusters that I’ll just hit the Medicare issue in a later post. (Or I’ll completely forget about it.)

To understand claims adjusters, you have to get inside the labyrinth that is the claims adjuster’s mind. (Why labyrinth? I’m just trying to use mildly inflammatory language. I’ll stop.) Insurance claims adjusters are more Pete Rose than Barry Bonds: they get paid for singles, not home runs. The great things a claims adjuster does vanish into thin air; the mistakes live on. Ironically, plaintiffs’ lawyers operate in the exact opposite world: hit a few million dollar verdicts in a row and everyone forgets your losses. Reason #42,353 why plaintiffs’ attorneys and insurance adjusters are the Montagues and Capulets.insurance4

Accident lawyers have a misconception about this, thinking adjusters get hugs from the higher ups for ripping off a plaintiffs’ lawyer in a settlement negotiation. Actually, hugs is the wrong word – they do get hugs. But, mostly, that’s it. The way to make a name for yourself is not by screwing plaintiffs’ lawyers but by not screwing up yourself. Make sure everyone likes you and, more importantly, don’t make any mistakes. Overpaying on an accident case is not that big of a screw up: but failure to have a death certificate in the file before paying a wrongful death case? That is a federal crime in the insurance world. Under-reserving a case? That’s an aggravated felony.
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