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 anther state to Virginia, Virginia 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: (1) accept the liability funds only when you have a settlement agreement with the UIM; (2) get all parties to sign off on a court order confirming who is released and who has any ongoing obligations.
Maryland Law
Where your UIM policy is issued in Maryland, you may be able to file suit in Virginia. Under Maryland UIM law, you have essentially 3 choices:
- You can pursue a tort action against the insured tortfeasor only. You have to put the UIM carrier on notice. They are not required to make an appearance. As long as they’re on proper notice, they are bound by the outcome. They may file a motion to intervene.
- You can file a tort action against the tortfeasor and also a breach of contract action against the UIM carrier.
- You can file a breach of contract action only against the UIM carrier after obtaining the tortfeasor’s liability limits. Lane v. Nationwide, 321 MD 165 (1990); King v. State Farm, 157 MD App. 287 (2004); Boone v. American Manufacturer’s Mutual, 150 MD App. 201 (2003).
Since the UM policy is simply a contract, there is no reason why Maryland law wouldn’t apply if you filed suit in Virginia.
Where to Litigate the Claim
Where you have a Virginia UIM policy, but a defendant from D.C. or Maryland or an accident that occurred in D.C. or Maryland, then you may be able to litigate the UIM claim in D.C. or Maryland. In both D.C. and Maryland, you can actually name the UM/UIM carrier as a party defendant. That may be a huge benefit to litigating in those jurisdictions.
Territorial Limits
If a person is struck by a motor vehicle outside of the United States, the question arises as to whether or not the territorial limitation applies. In Hodgson v. Doe, 203 Va. 938, 942 (1962), there is dicta that says that there is no territorial limitation for UM coverage because such a restriction does not exist in the predecessor statute to Va. Code § 38.2-2206. In addition the current mandatory SCC form UM endorsement does not include a jurisdictional limitation. Finally, a territorial limitation may violate Va. Code § 38.2-2220 and 2223.
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.
Sometimes the question arises as to whether the claimant has to give a recorded statement to the UIM carrier. Va. Code § 38.2-2206.H says that nothing may be required of the insured except the establishment of legal liability.Nationwide Mutual v. Sours, 205 Va. 602, (1964) To establish legal liability, you need to serve the UIM carrier and establish liability through a judgment. Allstate v. Eaton, 248 Va. 426, 430 (1994) addresses that issue indirectly where it cites the above Code section and states that it limits the conditions that an insurer can place on UM coverage. It goes on to state that it has no relevance to medical payments coverage. This is all contrary to what is in Part E of the Personal Auto Policy.
Car Accident Underinsured Motorist 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 Va. 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. Beng. 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 Lobello, defense counsel can say that they are here to assist the defendant.
In Drane v. Pentana, (Unpublished, Record No. 1595-22-3), Pentana defense counsel represented that he, the defendant and the UIM carrier were all in agreement to refer to Pentana as his client. The court properly allowed that.
Default of Defendant
Where there is UIM coverage at play, there probably is no sense in trying to take a default against a defendant. The conduct of the defendant cannot adversely impact the UIM carrier’s ability to defend the case. As such the court probably could not take the liability issue off the table. In State Farm v. Cuffee, 248 Va. 11 (1994), the court held that the insurer was entitled to participate in the liability portion of the trial.
If your damages exceed the available UM/UIM coverage, then an argument could be made that you’re entitled to a default against the defendant as a matter of law. If UM/UIM opposes that on the grounds that such a judgment would prejudice them, then there may have to be something in the order saying that the jury will not be informed of the default and further that any jury determination will only be binding as to the UM/UIM exposure but will not otherwise bar the plaintiff from getting a judgment against the defendant and pursuing that judgment.
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) and Lipscombe v. Security Insurance, 213 Va. 81 (1972), 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 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 the 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 Va. Code § 38.2-2206.A.
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.
Defendant Files Bankruptcy
In an instance where the defendant files bankruptcy during the pendency of your uninsured motorist claim, that does not wipe out the claim. It may wipe out the carrier’s subrogation claim. Elliot v. Hardison, 25 B.R. 305, 306 (E.D. Va. 1982); In re Mann, 58 B.R. 953, 954 (Bankr. W.D. Va. 1986); and Curran v. Roscoe, No. CL02-1877, 2003 Va. Cir. LEXIS 379 (Norfolk Cir. Ct. July 9, 2003)
This post is one of several dealing with uninsured and/or underinsured motorist claims. The others are general principles, calculating coverage, finding coverage , settling .
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