Determine the Amount of Coverage
UIM coverage is much more complex than 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:
Gradations of Insured
i. First Class. 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.
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) The uninsured motorist policy is actually glued to that person and to their automobile. 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. 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.
Listed Driver
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)
Examples
In INA v. Perry, 204 Va. 833 (1964), a police officer was struck by an uninsured motorist while standing some distance from his cruiser. 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. 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.
More Examples
Where a liability insurer properly denied coverage due to lack of permission, a passenger in the vehicle is not entitled to its UM coverage. 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 policy was triggered in the collision. McDuffy v. Progressive, 73 Va. Cir. 322 (2007) 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.
Priority of Payment and Credit
Previously Va. Code § 38.2-2206.B(2) only applied to UIM coverage. Now it applies to both. This means 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.
A. More than One Policy
The order of priority and credits is the following:
- The policy covering the vehicle carrying the plaintiff. The credit applies even if not used by 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.
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.
One way to get around the anti-stacking provision is to obtain separate policies for each vehicle that you own.
Only the named insured, resident spouse and resident relative (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.
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.
Examples
Accident occurs after July 1, 2023. Defendant has $50,000 liability. Plaintiff has $50,000 in UIM coverage through Nationwide, which policy was issued after July 2023. Plaintiff lived with her son who had $100,000 UIM policy with Travelers that was issued before July 1, 2023. Even though the Travelers policy was issued before July 2023, they do not get the benefit of the $50,000 credit. The full amount of the Travelers policy would stack for a total available coverage of $200,000 in this case.
Another example: At-fault driver has $100,000 in liability coverage. Plaintiff is driving non-owned vehicle with $50,000 in UIM coverage from Insurance Company B. Plaintiff owns a separate car with $100,000 in UIM with Company C with waived stacking. The resulting total coverage is $250,000. The waiver of the stacking does not apply since this is not the policy covering the vehicle occupied by the plaintiff at the time of the crash. An elected UIM credit will only apply when that policy covers a vehicle occupied by the plaintiff at the time of the crash.
Is there Liability and UM Coverage from the Same Policy?
Some rules:
1.. Where there is a liability claim by a passenger against Driver #1 and also a UM claim by that passenger against Driver #2, then the passenger may recover both the liability limits and the UM limits from that one policy.
2. Where there is only one at-fault driver who is the driver of the passenger’s vehicle, then the passenger cannot recover both liability and UM coverage. Trisvan v. Agway Ins. Co., 254 Va. 416 (1997)
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
Where there is only one policy involved, a vehicle cannot be underinsured with respect to itself. Superior Insurance Co. v. Hunter, 258 Va. 338 (1999) Although this rationale may apply in some instances, it does not apply in all since the definition of “underinsured” was changed in 2022 in Va. Code § 38.2-2206. The definition is no longer based on the amount of UM/UIM coverage. It is based now on whether the damages exceed the amount of liability coverage. As such it is now irrelevant if the vehicle is a single vehicle accident. As such a single liability carrier can be made to pay both its liability limits and its UIM limits.
3. 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)
UM and UIM Coverage from the Same Policy
As stated in GEICO v Miles, 879 S.E.2d 908 (2022), you cannot get both. UM coverage must equal the UIM coverage. Va. Code § 38.2-2206.A.
July 1, 2023 Crash/Coverage
In those instances where you’re dealing with a crash that occurred before the above date or where the coverage was issued prior to the above date, then you need to first look at the liability limits and then the UIM limits. In an instance where you’ve got two claimants, a mother and daughter, and their total UIM coverage is $300,000, the liability limit of the defendant is $100,000/$300,000, each claimant can get $100,000 from the liability policy. If the mother were to go to trial and get a verdict over $300,000, then she could recover that $100,000 plus $200,000 from the UIM coverage. If the daughter were then to go to trial and get a verdict over $300,000, she could recover the $100,000 from the liability carrier but only $100,000 from the UIM carrier since that exhausts the $300,000 limits. The total recovery under that instance is $500,000.
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.
Assume 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. 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.
This post is one of several dealing with uninsured and/or underinsured motorist claims. The others are general principles, finding coverage , settling ,litigation
Call, or contact us for a free consult. Also for more info on car accident underinsured calculating coverage see the Wikipedia pages.
