California requires all drivers to carry liability insurance. Bodily injury coverage provides a source of compensation to accident victims if the driver causes a collision that injures another driver. Unfortunately, not all drivers obey the law. In California, one out of every eight drivers has no insurance. Even when drivers do purchase insurance, they often fail to pay for more than the minimum coverage that the law requires. California drivers must carry bodily injury coverage of $15,000 per injured person, with total coverage of $30,000 per accident. If a California driver with the minimum coverage crashes into a car with three occupants, no occupant will be able to collect more than $15,000 from the negligent driver’s insurance coverage, and the total that the three drivers must share will not be more than $30,000. If all three were seriously injured, they might only collect $10,000 each. Even $15,000 is not usually enough to cover loss of income and future medical bills if an injury was serious. Options for Injury Victims Injury victims who are in an accident with an uninsured or underinsured driver have options. One is to sue the driver in order to recover compensation from the driver’s personal assets. Unfortunately, most drivers who do not have adequate insurance cannot afford it, and they have no assets with which to pay a judgment. Another option is to look for other sources of insurance. If the driver was performing a job-related duty at the time of the accident, it may be possible to pursue compensation from the driver’s employer. In unusual cases, homeowner’s insurance or an umbrella policy might provide a source of compensation. A personal injury lawyer can help an accident victim explore those options. Unfortunately, most accident victims who are injured by an uninsured driver will not be able to recover compensation from the driver or any third party. That’s why it makes sense for all drivers to insure themselves against uninsured or underinsured drivers. Uninsured and Underinsured Motorist Coverage Sensible drivers purchase as much auto insurance as they can afford. They want to protect their assets by assuring that they have enough coverage to pay claims if they are involved in an accident for which they share the blame. Whatever limit of bodily injury coverage a driver selects, it makes sense to purchase at least the same amount of uninsured and underinsured motorist coverage. Uninsured motorist coverage pays compensation for the driver’s injuries (up to the coverage limit) if the person responsible for the collision has no insurance. Underinsured motorist coverage pays the difference between the other driver’s policy limit and the total compensation to which the injured driver is entitled. Uninsured and underinsured motorist coverage is always a wise investment. It is relatively inexpensive compared to liability coverage. Drivers will probably never use it, but it can be an essential means of replacing lost wages and paying medical bills if the driver is injured in a serious accident caused by someone who has inadequate insurance coverage. Bad Faith Denials One advantage of making a claim for uninsured or underinsured motorist coverage is that every insurance company is required to be fair to its own policyholders. No such requirement exists when an injury victim makes a claim against another driver’s insurance company. Some insurance adjusters take the position in nearly every case that a claim should be denied. When the insurance company has insured the driver who caused the accident, the injury victim’s only remedy for a denied claim is to sue the negligent driver. That forces the insurance company to spend money defending the claim and takes the case out of the hands of the adjuster and into the hands of an insurance defense lawyer. The lawyer will often have a more reasonable view of the case, which will eventually lead to a settlement. The situation is different when an injury victim brings an uninsured or underinsured motorist claim against his or her own insurer. In those cases, the insurance adjuster has a duty to act in good faith. The fact that the victim paid for the insurance coverage imposes a duty on the insurance company to treat the victim fairly. The insurance company can be forced to pay extra compensation when it breaches that duty. An insurance company acts in bad faith when it unreasonably denies or delays a payment that the insurance contract entitles the insured to receive. An insurance company’s denial or delay of a claim is unreasonable when the company puts its own interest ahead of the interest of the insured. Examples of bad faith include:
- Claiming the insured was solely responsible for the accident without conducting a full investigation of the facts.
- Claiming that the insured’s coverage was not in effect at the time of the accident.
- Claiming that the insured’s injuries are not serious when medical evidence make the severity of those injuries clear.
- Ignoring the insured’s inquiries about the claim.
- Refusing to negotiate a reasonable settlement of the claim when the other driver’s fault is obvious and the injuries are clear.
- Misrepresenting California law (for example, by claiming that the insured is not entitled to any compensation because the insured was partially at fault).